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Prepare the journal entries to record the above variances.

Prepare the journal entries to record the above variances.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Activity 1 Parrothead Corp. determines that the following variances arose in production during March: Variance Materials purchase price Materials quantity... Labor efficiency.. Labor rate Factory overhead volume.. Factory overhead controllable Amount P2,400 favorable 1,000 favorable 500 favorable 750 unfavorable 1,700 favorable 2,950 unfavorable Materials purchases totaled P90,000 at standard costs, while P77,000 in materials were taken from inventory for use in production. Labor payroll totaled P144,000, and actual overhead incurred was P256,000. Required: Prepare the journal entries to record the above variances. 1. To record purchase of raw materials at standard price and related variance 2. To record transfer raw materials to production at standard usage rates and related variance 3. To increase work-in-process for the standard direct labor costs, and record the related labor variances 4. To increase work-in-process for the factory overhead (variable and fixed), and record the related factory overhead variances
Transcribed Image Text:Activity 1 Parrothead Corp. determines that the following variances arose in production during March: Variance Materials purchase price Materials quantity... Labor efficiency.. Labor rate Factory overhead volume.. Factory overhead controllable Amount P2,400 favorable 1,000 favorable 500 favorable 750 unfavorable 1,700 favorable 2,950 unfavorable Materials purchases totaled P90,000 at standard costs, while P77,000 in materials were taken from inventory for use in production. Labor payroll totaled P144,000, and actual overhead incurred was P256,000. Required: Prepare the journal entries to record the above variances. 1. To record purchase of raw materials at standard price and related variance 2. To record transfer raw materials to production at standard usage rates and related variance 3. To increase work-in-process for the standard direct labor costs, and record the related labor variances 4. To increase work-in-process for the factory overhead (variable and fixed), and record the related factory overhead variances
Expert Solution
Step 1

Following are the journal entries for the events:

Materials                                                                                                               90,000

Materials Purchase Price Variance                                                                                      2400

Accounts payable                                                                                                               87,600

 

Work in progress                                                                                                 78,000

Materials                                                                                                                            77,000

Materials quantity variance                                                                                                1,000

Step 2

Work in progress                                                                                                    143,750

Labor rate variance                                                                                                  750

Materials                                                                                                                             144,000

Materials quantity variance                                                                                                 500

 

Factory Overhead Control                                                                                       256,000

Various Credits                                                                                                                    256,000

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