Chapter 8, Problem 15P

1.

To determine

Prepare the journal entries to record the production units in both the departments, movement of goods, sale of goods by using the two variance method for analyzing the overhead variance.

Explanation of Solution

Prepare the journal entries to record the transactions.

Particulars	Debit($)	Credit($)
Work in Process—Mixing $\left(1,100\text{ eq}\text{. units }\times 2\text{ lb }\times \$2\right)$	4,400
Materials Quantity Variance— Mixing	200(1)
Materials Price Variance— Mixing	115(1)
Materials		4,715
Work in Process-Blending $\left(950\text{ eq}\text{. units }\times 2\text{ lb }\times \$1\right)$	1,900
Materials Price Variance— Blending		37(2)
Materials Quantity Variance—Blending		50(2)
Materials		1,813
Factory overhead $\left(\$1,000+\$500\right)$	1,500
Materials		1,500
Work in Process—Mixing $\left(1,100\text{ eq}\text{. units }\times 2\text{hr }\times \$10\right)$	22,000
Labor Rate Variance— Mixing	430(3)
Labor Efficiency Variance— Mixing		500(3)
Payroll		21,930
Work in Process— Blending $\left(950\text{ eq}\text{. units }\times 1\text{ hr }\times \$12\right)$	11,400
Labor Efficiency Variance— Blending	600(4)
Labor Rate Variance—Blending		200(4)
Payroll		11,800
Factory overhead (indirect labor) $\left(\$1,300+\$1,000\right)$	2,300
Payroll		2,300
Work in Process—Mixing $\left(1,100\text{ eq}\text{. units }\times \$6\right)$	6,600
Factory Overhead—Flexible-Budget Variance— Mixing	500(5)
Factory Overhead—Production-Volume Variance— Mixing		400(5)
Factory Overhead— Mixing		6,700
Work in Process— Blending $\left(950\text{ eq}\text{. units }\times \$4\right)$	3,800
Factory Overhead—Production-Volume Variance— Blending	50(6)
Factory Overhead—Flexible-Budget Variance— Blending		100(6)
Factory Overhead—Blending		3,750
Factory Overhead $\left(\$4,400+\$2,250\right)$	6,650
Various Credits		6,650
Factory Overhead— Mixing	6,700
Factory Overhead— Blending	3,750
Factory Overhead		10,450
Work in Process— Blending $\left(1,000\text{ units }\times \$30\right)$	30,000
Work in Process— Mixing		30,000
Finished Goods $\left(900\text{ units }\times \$48\right)$	43,200
Work in Process—Dept. Blending		43,200
Accounts Receivable $\left(850\text{ units }\times \$60\right)$	51,000
Sales		51,000
Cost of Goods Sold $\left(850\text{ units }\times \$48\right)$	40,800
Finished Goods		40,800

Table (1)

Working notes:

Variances are calculated as follows:

Materials:

1. 1) Mixing:

Figure (1)

Equivalent units in mixing:$1,000+\left(200\times 1/2\right)$

1. 2) Blending:

Figure (2)

Equivalent units in blending:$900+\left(100\times 1/2\right)$

Labor

1. 3) Mixing:

Figure (3)

1. 4) Blending:

Figure (4)

Factory overhead:

1. 5) Mixing:

Figure (5)

1. 6) Blending:

Figure (6)

2.

To determine

Calculate the ending balance of work-in process for every department.

Explanation of Solution

Calculate the ending balance of work-in process for mixing department.

Particulars	Amount($)
Materials $\left(200\times 1/2\times \$4\right)$	400
Labor $\left(200\times 1/2\times \$20\right)$	2,000
Factory overhead $\left(200\times 1/2\times \$6\right)$	600
Work-in process - Mixing	$3,000

Table (2)

Calculate the ending balance of work-in process for blending department.

Particulars	Amount($)	Amount($)
Cost from mixing $\left(100\times \$30\right)$		$3,000
Cost in blending:
Materials $\left(100\times 1/2\times \$2\right)$	$100
Labor $\left(100\times 1/2\times \$12\right)$	600
Factory overhead $\left(100\times 1/2\times \$4\right)$	200	900
Work-in process - Blending		$3,900

Table (3)