In all of the exercises involving variances, use “F” and “U” to designate favorable and unfavorable variances, respectively. E8-1 through E8-5 use the following data: The standard operating capacity of Tecate Manufacturing Co. is 1,000 units. A detailed study of the manufacturing data relating to the standard production cost of one product revealed the following: 1. Two pounds of materials are needed to produce one unit. 2. Standard unit cost of materials is $8 per pound. 3. It takes one hour of labor to produce one unit. 4. Standard labor rate is $10 per hour. 5. Standard overhead (all variable) for this volume is $4,000. Each case in E8-1 through E8-5 requires the following: a. Set up a standard cost summary showing the standard unit cost. b. Analyze the variances for materials and labor. c. Make journal entries to record the transfer to Work in Process of: 1. Material cost 2.Labor cost 3. Overhead cost (When making these entries, include the variances.) d. Prepare the journal entry to record the transfer of costs to the finished goods account. E8-1 Standard unit cost; variance analysis; journal entries 1,000 units were started and finished. Case 1: All prices and quantities for the cost elements are stan- dard, except for materials cost, which is $8.50 per pound. Case 2: All prices and quantities for the cost elements are stan- dard, except that 1,900 lb of materials were used. Use this format:
In all of the exercises involving variances, use “F” and “U” to designate favorable and unfavorable variances, respectively.
E8-1 through E8-5 use the following data: The standard operating capacity of Tecate Manufacturing Co. is 1,000 units. A detailed study of the manufacturing data relating to the standard production cost of one product revealed the following:
1. Two pounds of materials are needed to produce one unit.
2. Standard unit cost of materials is $8 per pound.
3. It takes one hour of labor to produce one unit.
4. Standard labor rate is $10 per hour.
5. Standard
Each case in E8-1 through E8-5 requires the following:
a. Set up a
b. Analyze the variances for materials and labor.
c. Make journal entries to record the transfer to Work in Process of:
1. Material cost
2.Labor cost
3. Overhead cost
(When making these entries, include the variances.)
d. Prepare the
E8-1 Standard unit cost;
Case 1: All prices and quantities for the cost elements are stan- dard, except for materials cost, which is $8.50 per pound.
Case 2: All prices and quantities for the cost elements are stan- dard, except that 1,900 lb of materials were used.
Use this format:
![286
Chapter 08, VanDerbeck
EXERCISES
E8-1
a.
Standard Cost Summary
Materials-2 Ibs. @ $8
Labor- 1 hr. @ $10...........
Factory overhead-$4,000 + 1,000 units
$16
10
4
Standard unit cost.
$30
Note: The standard cost is the same for E8-2 through E8-5.
b.
Case 1: Materials price variance = AQ (AP-SP)
= 2,00O ($8.5O-$8.00)
$1.000U
Case 2: Materials quantity variance= SP (AQ-SQ)
$8 [1,900 - (1,000 × 2)]
= $800 F
c.
Case 1
Work in Process (2,00 0 x $8)
Materials Price Variance (U)
(2,000 x $0.50)..............
(1)
Materials (2,00 0 × $8.5o)
Work in Process (1, 000 hrs. x $10)
Payroll .......
Work in Process.
Factory Overhead
(2)
...
(3)
Case 2
Work in Process...
Materials Quantity Variance (F)
(100 x $8). ..............
Materials (1,90 0 x $8)
Work in Process
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Work in Process........
Factory Overhead
(1)
...-.
(2)
..... ..
(3)
d.
Cases 1 and 2
Finished Goods (1,00 0 x $30)
Work in Process........
Note: This entry is the same for E8-2 and E8-3.
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