Journal Entries in a Standard Cost System Boron Chemical Company produces a syntheticresin that is used in the automotive industry. The company uses a standard cost system. For eachgallon of output, the following direct manufacturing costs are anticipated:Direct labor: 2 hours at $25.00 per hour $50.00Direct materials: 2 gallons at $10.00 per gallon $20.00During December of the current year, Boron produced a total of 2,500 gallons of output and incurredthe following direct manufacturing costs:Direct labor: 4,900 hours worked at an average wage rate of $19.50 per hourDirect materials:Purchased: 6,000 gallons @ $10.45 per gallonUsed in production: 5,100 gallonsBoron records price variances for materials at the time of purchase.Required Prepare journal entries for the following events and transactions. (Round all amounts to nearestwhole dollar.)1. Purchase, on credit, of direct materials.2. Direct materials issued to production.3. Direct labor cost of units completed this period.4. Direct manufacturing cost (direct labor plus direct materials) of units completed and transferred toFinished Goods Inventory.5. Sale (on credit), for $150.00 per gallon, of 2,000 gallons of output. (Hint: You will need two journalentries here.)
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
resin that is used in the automotive industry. The company uses a standard cost system. For each
gallon of output, the following direct
Direct labor: 2 hours at $25.00 per hour $50.00
Direct materials: 2 gallons at $10.00 per gallon $20.00
During December of the current year, Boron produced a total of 2,500 gallons of output and incurred
the following direct manufacturing costs:
Direct labor: 4,900 hours worked at an average wage rate of $19.50 per hour
Direct materials:
Purchased: 6,000 gallons @ $10.45 per gallon
Used in production: 5,100 gallons
Boron records price variances for materials at the time of purchase.
Required Prepare journal entries for the following events and transactions. (Round all amounts to nearest
whole dollar.)
1. Purchase, on credit, of direct materials.
2. Direct materials issued to production.
3. Direct labor cost of units completed this period.
4. Direct manufacturing cost (direct labor plus direct materials) of units completed and transferred to
Finished Goods Inventory.
5. Sale (on credit), for $150.00 per gallon, of 2,000 gallons of output. (Hint: You will need two journal
entries here.)
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 4 images
