70.2K

Verified Solution

Link Copied!

1. Gina in the King's Road Inc., makes naugahyde chairs. The company uses two main materials to make the furniture, wood and leather. The company's standard costs for materials and labor are as follows (wood in boards and leather in pounds, variable/fixed overhead based on machine hours). Overhead costs are allocated to production based on machine hours. Standard Quantity Or Hours 19 boards Standard Price StandardCost or Rate $5.90 per board $ 112.10 Wood Leather 28 pounds $ 8.40 per pound 235.20 Direct Labor 5.5 DL hours $ 19.00 per DL hour 104.50 Variable Manufacturing Overhead 2.3 M hours $ 8.50 per M hour 19.55 Fixed Manufacturing Overhead 2.3 M hours $ 18.00 per M hour 41.40 (Note: Denominator level of 9200 M hours, budgeted production 4000 units, and budgeted fixed overhead of $ 165,600.) Total standard cost per unit $ 512.75 The months results are as follows: Production and sales 3800 units. Actual fixed overhead costs incurred were $ 169,000. Fixed manufacturing overhead is allocated to finished units using the per unit amount listed above. Purchases of wooc this month were 92,000 boards for $ 6.20 each, the wood beginning inventory consisted of 3,500 boards at a total cost of $20,650, the month's ending inventory was 7,000 boards. Purchases of leather this month were 118,600 pounds for $7.95 each, the leather beginning inventory was 1,000 pounds at a total cost of $8,400, the month's ending inventory was 2,500 pounds. Finished goods and work in process inventories are insignificant and can be ignored. Assembly workers worked 23,350 direct labor hours at an average cost of $ 18.40 a DL hour. 8,840 machine hours were used at an average variable overhead cost of $ 8.20 per M hour. it is the company's policy to close all overhead variances to cost of goods sold on a monthly basis. 1. Draft Journal entries for the variances above to initially record the variances (you need only use the journal entry examples from chapters 7 but you need not record sales of products, nor close the variances) ONLY DO JOURNALS

Answer & Explanation Solved by verified expert

See Answer