Problem 19-1B Production costs computed and recorded; reports prepared C2 P1 P2 P3 P4 Perez Mfg.’s August 31 inventory of raw materials is $150,000. Raw materials purchases in September are $400,000, and factory payroll cost in September is $232,000. Overhead costs incurred in September are: indirect materials, $30,000; indirect labor, $14,000; factory rent, $20,000; factory utilities, $12,000; and factory equipment depreciation, $30,000. The predetermined overhead rate is 50% of direct labor cost. Job 114 is sold for $380,000 cash in September. Costs for the three jobs worked on in September follow. Required Determine the total of each production cost incurred for September (direct labor, direct materials, and applied overhead) and the total cost assigned to each job (including the balances from August 31). Prepare journal entries for the month of September to record the following. Materials purchases (on credit). Direct materials used in production. Direct labor paid and assigned to Work in Process Inventory. Indirect labor paid and assigned to Factory Overhead. Overhead costs applied to Work in Process Inventory. Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.) Transfer of Jobs 114 and 115 to the Finished Goods Inventory. Cost of Job 114 in the Cost of Goods Sold account. Revenue from the sale of Job 114. Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.) Check (2j) $3,000 overapplied Prepare a schedule of cost of goods manufactured. (3) Cost of goods manufactured, $500,000 Compute gross profit for September. Show how to present the inventories on the September 30 balance sheet.
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.
Problem 19-1B Production costs computed and recorded; reports prepared C2 P1 P2 P3 P4
Perez Mfg.’s August 31 inventory of raw materials is $150,000. Raw materials purchases in September are $400,000, and
Required
Determine the total of each production cost incurred for September (direct labor, direct materials, and applied overhead) and the total cost assigned to each job (including the balances from August 31).
Prepare
Materials purchases (on credit).
Direct materials used in production.
Direct labor paid and assigned to Work in Process Inventory.
Indirect labor paid and assigned to Factory Overhead.
Overhead costs applied to Work in Process Inventory.
Actual overhead costs incurred, including indirect materials. (Factory rent and utilities are paid in cash.)
Transfer of Jobs 114 and 115 to the Finished Goods Inventory.
Cost of Job 114 in the Cost of Goods Sold account.
Revenue from the sale of Job 114.
Assignment of any underapplied or overapplied overhead to the Cost of Goods Sold account. (The amount is not material.)
Check (2j) $3,000 overapplied
Prepare a schedule of cost of goods manufactured.
(3) Cost of goods manufactured, $500,000
Compute gross profit for September. Show how to present the inventories on the September 30
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