age hourly rate of $11.70, prepare a jou ecord actual costs, standard costs, and a
age hourly rate of $11.70, prepare a jou ecord actual costs, standard costs, and a
Chapter8: Standard Costs And Variances
Section: Chapter Questions
Problem 5EA: Sitka Industries uses a cost system that carries direct materials inventory at a standard cost. The...
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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.
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Question
![b. Assuming employees worked 8,900 direct labor hours.
at an average hourly rate of $11.70, prepare a journal
entry to record actual costs, standard costs, and any
labor variances.
General Journal
Description
Work in process inventory
Wages payable
To record direct labor costs
Debit](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3537a5bf-9ba4-4d46-9d69-9809ffbc0823%2Fd0288266-d7e4-46e5-9f79-94595c5379b4%2F5ikpy3i_processed.jpeg&w=3840&q=75)
Transcribed Image Text:b. Assuming employees worked 8,900 direct labor hours.
at an average hourly rate of $11.70, prepare a journal
entry to record actual costs, standard costs, and any
labor variances.
General Journal
Description
Work in process inventory
Wages payable
To record direct labor costs
Debit
![Variances and Journal Entries
Jacobs Company manufactures a single product and
uses a standard costing system. The nature of its
product dictates that it be sold in the period it is
produced. Thus, no ending work in process or finished
goods inventories remain at the end of the period.
However, raw materials can be stored and are
purchased in bulk when prices are favorable. Per-unit
standard product costs are material, $8 (4 pounds);
labor, $6 (0.5 hour); and variable overhead, $4 (based on
direct labor hours). Budgeted fixed overhead is $54,000.
Jacobs accounts for all inventories and cost of goods
sold at standard cost and records each variance in a
separate account. The following data relate to May
when 17,700 finished units were produced.
a. Assume Jacobs purchased 69,000 pounds of raw
materials on account at $2.20 per pound and used
67,000 pounds in May's production, prepare a journal
entry to record the purchase of raw materials and a
separate journal entry to record the use of raw
materials in production. Record these entries using
standard costs and include the appropriate materials
variances.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3537a5bf-9ba4-4d46-9d69-9809ffbc0823%2Fd0288266-d7e4-46e5-9f79-94595c5379b4%2Fvwb5338_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Variances and Journal Entries
Jacobs Company manufactures a single product and
uses a standard costing system. The nature of its
product dictates that it be sold in the period it is
produced. Thus, no ending work in process or finished
goods inventories remain at the end of the period.
However, raw materials can be stored and are
purchased in bulk when prices are favorable. Per-unit
standard product costs are material, $8 (4 pounds);
labor, $6 (0.5 hour); and variable overhead, $4 (based on
direct labor hours). Budgeted fixed overhead is $54,000.
Jacobs accounts for all inventories and cost of goods
sold at standard cost and records each variance in a
separate account. The following data relate to May
when 17,700 finished units were produced.
a. Assume Jacobs purchased 69,000 pounds of raw
materials on account at $2.20 per pound and used
67,000 pounds in May's production, prepare a journal
entry to record the purchase of raw materials and a
separate journal entry to record the use of raw
materials in production. Record these entries using
standard costs and include the appropriate materials
variances.
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