overhead based on direct labour hours. The business expects to incur $2,400,000 of manufacturing overhead costs and to use 40,000 direct labour hours during 20X9. At the end of June 20X9, One Stop Invitations & More reported the following inventories: Raw Materials Inventory $200,000 Work-in-Progress Inventory $170,000 Finished Goods Inventory $110,000 During July 20X9, One Stop Invitations & More actually used 3,000 direct labour hours and recorded the following transactions. i) Purchased materials on account $310,000 ii) Manufacturing wages incurred $400,000 iii) Materials requisitioned (includes $30,000 of indirect materials) $420,000 Assigned manufacturing wages, 90% direct labour, 10% indirect labour Other manufacturing overhead incurred iv) v) $130,000 vi) Allocated manufacturing overhead for July 20X9 vii) Cost of jobs completed $995,000 viii) Cost of jobs sold (on account) at a margin of 33% $960,000
overhead based on direct labour hours. The business expects to incur $2,400,000 of manufacturing overhead costs and to use 40,000 direct labour hours during 20X9. At the end of June 20X9, One Stop Invitations & More reported the following inventories: Raw Materials Inventory $200,000 Work-in-Progress Inventory $170,000 Finished Goods Inventory $110,000 During July 20X9, One Stop Invitations & More actually used 3,000 direct labour hours and recorded the following transactions. i) Purchased materials on account $310,000 ii) Manufacturing wages incurred $400,000 iii) Materials requisitioned (includes $30,000 of indirect materials) $420,000 Assigned manufacturing wages, 90% direct labour, 10% indirect labour Other manufacturing overhead incurred iv) v) $130,000 vi) Allocated manufacturing overhead for July 20X9 vii) Cost of jobs completed $995,000 viii) Cost of jobs sold (on account) at a margin of 33% $960,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Question
Required:
- Compute One Stop’s predetermined manufacturing
overhead rate for 20X9. - State the
journal entries necessary to record the above transactions in the general journal. Assume that One Stop uses the perpetual inventory system. - Post the manufacturing overhead transactions to the Manufacturing Overhead T-account, clearly showing the balance before closing the account. State the journal entries necessary to dispose of the variance. Assume that the manufacturing overhead variance is immaterial.
Transcribed Image Text:overhead based on direct labour hours. The business expects to incur $2,400,000 of manufacturing
overhead costs and to use 40,000 direct labour hours during 20X9.
At the end of June 20X9, One Stop Invitations & More reported the following inventories:
Raw Materials Inventory
$200,000
Work-in-Progress Inventory $170,000
Finished Goods Inventory
$110,000
During July 20X9, One Stop Invitations & More actually used 3,000 direct labour hours and recorded the
following transactions.
i)
Purchased materials on account
$310,000
$400,000
ii)
Manufacturing wages incurred
Materials requisitioned (includes $30,000 of indirect materials)
iii)
$420,000
Assigned manufacturing wages, 90% direct labour, 10% indirect labour
iv)
v)
Other manufacturing overhead incurred
$130,000
vi)
Allocated manufacturing overhead for July 20X9
vii) Cost of jobs completed
$995,000
viii)
Cost of jobs sold (on account) at a margin of 33/s%
$960,000
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