ECO206Y1 Chapter Notes -Finished Good, Scott Paper Company, Income Statement
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P23-6B Journalize and post standard cost entries, and prepare income statement | |||||||||
Frio Company uses standard costs with its job order cost accounting system. | |||||||||
In January, an order (Job No. 84) was received for 5,500 units of Product D . The standard | |||||||||
cost of one unit of Product D is as follows. | |||||||||
Direct materials | 1.5 pounds at $4.00 per pound | $6.00 | |||||||
Direct labor | 1 hour at $9.00 per hour | 9.00 | |||||||
Overhead | 1 hour (variable $7.40; fixed $8.00 | 15.40 | |||||||
Standard cost per unit | $30.40 | ||||||||
Overhead is applied on the basis of direct labor hours. Normal capacity for the month | |||||||||
of January was 6,000 direct labor hours. During January, the following transactions | |||||||||
applicable to Job No, 48 occurred. | |||||||||
1. Purchased 8,100 pounds of raw materials on account at $3.70 per pound. | |||||||||
2. Requisitioned 8,100 pounds of raw materials for production. | |||||||||
3. Incurred 5,200 hours of direct labor at a rate of $9.20 per hour. | |||||||||
4. Worked 5,200 hours of direct labor on Job No.84. | |||||||||
5. Incurred $87,500 of manufacturing overhead on account. | |||||||||
6. Applied overhead to Job No. 84 on basis of direct labor hours. | |||||||||
7. Transferred Job NO. 84 to finished goods. | |||||||||
8. Billed customer for Job No. 84 at a selling price of $270,000. | |||||||||
Instructions | |||||||||
(a) Journalize the transactions. | |||||||||
(b) Post to the job order cost accounts. | |||||||||
(c ) Prepare the entry to recognize the total overhead variance. | |||||||||
(d) Prepare the January 2014 income statement for management. Assume selling and | |||||||||
administrative expenses were $60,000. | |||||||||
NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?" . | |||||||||
(a)(1) | Account | Value | |||||||
Account | Value | ||||||||
Account | Value | ||||||||
(a)(2) | Account | Value | |||||||
Account | Value | ||||||||
Account | Value | ||||||||
(a)(3) | Account | Value | |||||||
Account | Value | ||||||||
Account | Value | ||||||||
(a)(4) | Account | Value | |||||||
Account | Value | ||||||||
Account | Value | ||||||||
(a)(5) | Account | Value | |||||||
Account | Value | ||||||||
(a)(6) | Account | Value | |||||||
Account | Value | ||||||||
(a)(7) | Account | Value | |||||||
Account | Value | ||||||||
(a)(8) | Account | Value | |||||||
Account | Value | ||||||||
Account | Value | ||||||||
Account | Value | ||||||||
(b) | Raw Materials Inventory | Materials Price Variance | Work in Process Inventory | ||||||
Value | Value | Value | Value | Value | |||||
Value | |||||||||
Value | |||||||||
Factory Labor | Materials Quantity Variance | Finished Goods Inventory | |||||||
Value | Value | Value | Value | Value | |||||
Manufacturing Overhead | Labor Price Variance | Cost of Goods Sold | |||||||
Value | Value | Value | Value | ||||||
Labor Quantity Variance | |||||||||
Value | |||||||||
(c ) | Account | Value | |||||||
Account | Value | ||||||||
(d) | FRIO COMPANY | ||||||||
Income Statement | |||||||||
For the Month Ended January 31, 2014 | |||||||||
Sales revenue | Value | ||||||||
Cost of goods sold (at standard) | Value | ||||||||
Gross profit (at standard) | Value | ||||||||
Variances | |||||||||
Material price | Value | ||||||||
Materials quantity | Value | ||||||||
Labor price | Value | ||||||||
Labor quantity | Value | ||||||||
Overhead | Value | ||||||||
Total variance - favorable | Value | ||||||||
Gross profit (actual) | Value | ||||||||
Selling and administrative expenses | Value | ||||||||
Net income | Value | ||||||||