Patel and Sons Inc. uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for the plant is defined as 51,300 machine hours per year, which represents 25,650 units of output. Annual budgeted fixect factory overhead costs are $256,500 and the budgeted variable factory overhead cost rate is $2.40 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year was 18,900 units, which took 40.300 machine hours. Actual fixed factory overhead costs for the year amounted to $250,500 while the actual variable overhead cost per unit was $2.30. Based on the information provided above, provide an appropriate end-of-year closing entry for each of the following two independent situations: (a) the net factory overhead cost variance is closed entirely to Cost of Goods Sold (CSG), and (b) the net factory overhead variance is allocated among WIP Inventory, Finished Goods Inventory, and CGS using the following percentages: 30%, 20%, and 50%, respectively. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. If no entry is required for a transaction/event, select "No journal entry required" in the first account fleld.)
Patel and Sons Inc. uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for the plant is defined as 51,300 machine hours per year, which represents 25,650 units of output. Annual budgeted fixect factory overhead costs are $256,500 and the budgeted variable factory overhead cost rate is $2.40 per unit. Factory overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual output for the year was 18,900 units, which took 40.300 machine hours. Actual fixed factory overhead costs for the year amounted to $250,500 while the actual variable overhead cost per unit was $2.30. Based on the information provided above, provide an appropriate end-of-year closing entry for each of the following two independent situations: (a) the net factory overhead cost variance is closed entirely to Cost of Goods Sold (CSG), and (b) the net factory overhead variance is allocated among WIP Inventory, Finished Goods Inventory, and CGS using the following percentages: 30%, 20%, and 50%, respectively. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. If no entry is required for a transaction/event, select "No journal entry required" in the first account fleld.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
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.
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Transcribed Image Text:Patel and Sons Inc. uses a standard cost system to apply factory overhead costs to units produced. Practical capacity for
the plant is defined as 51,300 machine hours per year, which represents 25,650 units of output. Annual budgeted fixed
factory overhead costs are $256,500 and the budgeted variable factory overhead cost rate is $2.40 per unit. Factory
overhead costs are applied on the basis of standard machine hours allowed for units produced. Budgeted and actual
output for the year was 18,900 units, which took 40.300 machine hours. Actual fixed factory overhead costs for the year
amounted to $250,500 while the actual variable overhead cost per unit was $2.30.
Based on the information provided above, provide an appropriate end-of-year closing entry for each of the following two independent
situations: (a) the net factory overhead cost variance is closed entirely to Cost of Goods Sold (CSG), and (b) the net factory overhead
variance is aliocated among WIP Inventory, Finished Goods Inventory, and CGS using the following percentages: 30%, 20%, and 50%,
respectively. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. If no entry is
required for a transaction/event, select "No journal entry required" in the first account field.)
Transcribed Image Text:Journal entry worksheet
2
<>
Record the net variance closed to cost of goods sold.
Note: Enter debits before credits.
Transaction
General Journal
Debit
Credit
a
Record entry
Clear entry
View general journal
Journal entry worksheet
< 1
<>
2
Record the net variance allocated to ending inventories and Cost of goods sold.
Note: Enter debits before credits.
Transaction
General Journal
Debit
Credit
Record entry
Clear entry
View general journal
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