Chapter 23, Problem E23.23E

Preparing journal entries

Hayesvillc Company uses a standard cost system and reports the following information for 2016:

Standard
3 yards of cloth per unit at $1.05 per yard
2 direct labor hours per unit at $10.25 per hours
Overhead allocated at $4.00 per direct labor hours
Actual:

2,700 yards of cloth were purchased at $1.10 per yard
Employees worked 1,300 hours and were paid $9.75 per hours
Actual variable overhead was $4,000
Actual fixed overhead was $2,500

Hayesville Company reported the following variances:

Direct Materials Cost Variance	$ 135 F
Direct Materials Efficiency Variance	315 F
Direct Labor Cost Variance	650 U
Direct Labor Efficiency Variance	7,715 F
Variable Overhead Cost Variance	1,400 U
Variable Overhead Efficiency Variance	1,400 F
Fixed Overhead Cost Variance	200 U
Fixed Overhead Volume Variance	1,700 F

Hayesville produced 1,000 units of finished product in 2016. Record the journal entries to record direct material, direct labor, variable overhead, and fixed overhead, assuming all expenditure were on accounts and there were no beginning or ending balance in the inventory accounts (all material purchased were used in production, and all goods produced were sold.) Record the journal entries to record the transfer to Finished Goods Inventory and Cost of Goods Sold (omit the Journal entry for Sales Revenue). Adjust the Manufacturing Overhead account.