201
202
203
137) Eagan Corporation manufactures one product. The company uses a standard cost system in
which inventories are recorded at their standard costs. The standard cost card for the company’s
only product is as follows:
Inputs
Standard Quantity
or Hours
Standard Price
or Rate
Standard
Cost
Direct materials
1.0
gallons
$6.00
per gallon
$6.00
Direct labor
0.50
hours
$19.50
per hour
9.75
Fixed manufacturing overhead
0.50
hours
$3.00
per hour
1.50
Total standard cost per unit
$17.25
During the year, direct labor workers (who were paid in cash) worked 11,250 hours at an average
cost of $19.70 per hour on 22,300 units. These units were started and completed during the year.
Required:
Completely record the direct labor costs, along with any direct labor variances, in the below
worksheet. Because of the width of the worksheet, it is in two parts. In your text, these two parts
would be joined side-by-side to make one very wide worksheet. The beginning balances have been
provided for each of the accounts, including the Property, Plant, and Equipment (net) account
which is abbreviated as PP&E (net).
Cash
Raw
Materials
Work in
Process
Finished
Goods
PP&E (net)
=
1/1
$1,100,000
$43,800
$0
$87,975
$628,300
=
=
=
Materials
Price
Variance
Materials
Quantity
Variance
Labor Rate
Variance
Labor
Efficiency
Variance
FOH Budget
Variance
FOH
Volume
Variance
Retained
Earnings
1/1
$0
$0
$0
$0
$0
$0
$1,860,075
205
138) Woodhouse Corporation manufactures one product. It does not maintain any beginning or
ending Work in Process inventories. The company uses a standard cost system in which
inventories are recorded at their standard costs and any variances are closed directly to Cost of
Goods Sold. There is no variable manufacturing overhead. The standard cost card for the
company’s only product is as follows:
Inputs
Standard Quantity
or Hours
Standard Price
or Rate
Standard
Cost
Direct materials
2.9
liters
$5.50
per liter
$15.95
Direct labor
0.90
hours
$20.00
per hour
18.00
Fixed manufacturing overhead
0.90
hours
$9.00
per hour
8.10
Total standard cost per unit
$42.05
The company calculated the following variances for the year:
Materials price variance
$11,860
U
Materials quantity variance
$550
F
Labor rate variance
$11,914
U
Labor efficiency variance
$2,000
U
Fixed manufacturing overhead budget variance
$15,700
U
Fixed manufacturing overhead volume variance
$30,780
F
The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing
overhead of $121,500 and budgeted activity of 13,500 hours.
During the year, the company completed the following transactions:
a. Purchased 59,300 liters of raw material at a price of $5.70 per liter.
b. Used 54,420 liters of the raw material to produce 18,800 units of work in process.
c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash)
worked 17,020 hours at an average cost of $20.70 per hour.
d. Applied fixed overhead to the 18,800 units in work in process inventory using the predetermined
overhead rate multiplied by the number of direct labor-hours allowed. Actual fixed overhead costs
for the year were $137,200. Of this total, $30,200 related to items such as insurance, utilities, and
indirect labor salaries that were all paid in cash and $107,000 related to depreciation of
manufacturing equipment.
e. Transferred 18,800 units from work in process to finished goods.
f. Sold for cash 19,100 units to customers at a price of $47.80 per unit.
g. Completed and transferred the standard cost associated with the 19,100 units sold from finished
goods to cost of goods sold.
h. Paid $100,000 of selling and administrative expenses.
i. Closed all standard cost variances to cost of goods sold.
206
Required:
1. Record the above transactions in the worksheet that appears below. Because of the width of the
worksheet, it is in two parts. In your text, these two parts would be joined side-by-side to make one
very wide worksheet. The beginning balances have been provided for each of the accounts,
including the Property, Plant, and Equipment (net) account which is abbreviated as PP&E (net).
Cash
Raw Materials
Work in
Process
Finished
Goods
PP&E (net)
=
1/1
$1,170,000
$25,520
$0
$79,895
$778,000
=
a.
=
b.
=
c.
=
d.
=
e.
=
f.
=
g.
=
h.
=
i.
=
12/31
=
=
Materials
Price
Variance
Materials
Quantity
Variance
Labor Rate
Variance
Labor
Efficiency
Variance
FOH Budget
Variance
FOH
Volume
Variance
Retained
Earnings
1/1
$0
$0
$0
$0
$0
$0
$2,053,415
a.
b.
c.
d.
e.
f.
g.
h.
i.
12/31
2. Determine the ending balance (e.g., 12/31 balance) in each account.
207
209
139) Ferrini Corporation manufactures one product. It does not maintain any beginning or ending
Work in Process inventories. The company uses a standard cost system in which inventories are
recorded at their standard costs and any variances are closed directly to Cost of Goods Sold. There
is no variable manufacturing overhead. The standard cost card for the company’s only product is as
follows:
Inputs
Standard Quantity
or Hours
Standard Price
or Rate
Standard
Cost
Direct materials
2.7
pounds
$8.00
per pound
$21.60
Direct labor
0.50
hours
$21.00
per hour
10.50
Fixed manufacturing overhead
0.50
hours
$11.00
per hour
5.50
Total standard cost per unit
$37.60
The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing
overhead of $82,500 and budgeted activity of 7,500 hours.
During the year, the company completed the following transactions:
a. Purchased 57,700 pounds of raw material at a price of $8.50 per pound.
b. Used 52,750 pounds of the raw material to produce 19,500 units of work in process.
c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash)
worked 9,950 hours at an average cost of $20.70 per hour.
d. Applied fixed overhead to the 19,500 units in work in process inventory using the predetermined
overhead rate multiplied by the number of direct labor-hours allowed. Actual fixed overhead costs
for the year were $97,100. Of this total, -$12,900 related to items such as insurance, utilities, and
indirect labor salaries that were all paid in cash and $110,000 related to depreciation of
manufacturing equipment.
e. Transferred 19,500 units from work in process to finished goods.
f. Sold for cash 20,200 units to customers at a price of $44.20 per unit.
g. Completed and transferred the standard cost associated with the 20,200 units sold from finished
goods to cost of goods sold.
h. Paid $61,000 of selling and administrative expenses.
i. Closed all standard cost variances to cost of goods sold.
210
Required:
1. Compute all direct materials, direct labor, and fixed overhead variances for the year.
2. Record the above transactions in the worksheet that appears below. Because of the width of the
worksheet, it is in two parts. In your text, these two parts would be joined side-by-side to make one
very wide worksheet. The beginning balances have been provided for each of the accounts,
including the Property, Plant, and Equipment (net) account which is abbreviated as PP&E (net).
Cash
Raw Materials
Work in
Process
Finished
Goods
PP&E (net)
=
1/1
$1,000,000
$25,920
$0
$67,680
$750,500
=
a.
=
b.
=
c.
=
d.
=
e.
=
f.
=
g.
=
h.
=
i.
=
12/31
=
=
Materials
Price
Variance
Materials
Quantity
Variance
Labor Rate
Variance
Labor
Efficiency
Variance
FOH Budget
Variance
FOH
Volume
Variance
Retained
Earnings
1/1
$0
$0
$0
$0
$0
$0
$1,844,100
a.
b.
c.
d.
e.
f.
g.
h.
i.
12/31
3. Determine the ending balance (e.g., 12/31 balance) in each account.
4. Prepare an income statement for the year.
212
215
140) Cleland Corporation manufactures one product. It does not maintain any beginning or ending
Work in Process inventories. The company uses a standard cost system in which inventories are
recorded at their standard costs and any variances are closed directly to Cost of Goods Sold. There
is no variable manufacturing overhead. The standard cost card for the company’s only product is as
follows:
Inputs
Standard Quantity
or Hours
Standard Price
or Rate
Standard
Cost
Direct materials
1.4
gallons
$6.00
per gallon
$8.40
Direct labor
0.50
hours
$19.50
per hour
9.75
Fixed manufacturing overhead
0.50
hours
$4.50
per hour
2.25
Total standard cost per unit
$20.40
The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing
overhead of $56,250 and budgeted activity of 12,500 hours.
During the year, the company completed the following transactions:
a. Purchased 29,400 gallons of raw material at a price of $5.20 per gallon.
b. Used 25,520 gallons of the raw material to produce 18,300 units of work in process.
c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash)
worked 8,850 hours at an average cost of $19.60 per hour.
d. Applied fixed overhead to the 18,300 units in work in process inventory using the predetermined
overhead rate multiplied by the number of direct labor-hours allowed. Actual fixed overhead costs
for the year were $41,650. Of this total, -$3,350 related to items such as insurance, utilities, and
indirect labor salaries that were all paid in cash and $45,000 related to depreciation of
manufacturing equipment.
e. Transferred 18,300 units from work in process to finished goods.
f. Sold for cash 20,600 units to customers at a price of $26.70 per unit.
g. Completed and transferred the standard cost associated with the 20,600 units sold from finished
goods to cost of goods sold.
h. Paid $55,000 of selling and administrative expenses.
i. Closed all standard cost variances to cost of goods sold.
216
Required:
1. Compute all direct materials, direct labor, and fixed overhead variances for the year.
2. Record the above transactions in the worksheet that appears below. Because of the width of the
worksheet, it is in two parts. In your text, these two parts would be joined side-by-side to make one
very wide worksheet. The beginning balances have been provided for each of the accounts,
including the Property, Plant, and Equipment (net) account which is abbreviated as PP&E (net).
Cash
Raw Materials
Work in
Process
Finished
Goods
PP&E (net)
=
1/1
$1,010,000
$49,560
$0
$71,400
$406,400
=
a.
=
b.
=
c.
=
d.
=
e.
=
f.
=
g.
=
h.
=
i.
=
12/31
=
=
Materials
Price
Variance
Materials
Quantity
Variance
Labor Rate
Variance
Labor
Efficiency
Variance
FOH Budget
Variance
FOH Volume
Variance
Retained
Earnings
1/1
$0
$0
$0
$0
$0
$0
$1,537,360
a.
b.
c.
d.
e.
f.
g.
h.
i.
12/31
3. Determine the ending balance (e.g., 12/31 balance) in each account.
218
