Question

uestion 9 Vista Company installed a standard cost system on January 1. Selected transactions for the month of January are as follows. 1. Purchased 18,600 units of raw materials on account at a cost of $3.50 per unit. Standard cost was $3.20 per unit. 2. Issued 18,600 units of raw materials for jobs that required 18,380 standard units of raw materials. 3. Incurred 15,000 actual hours of direct labor at an actual rate of $4.70 per hour. The standard rate is $5.20 per hour. (Credit Factory Wages Payable.) 4. Performed 15,000 hours of direct labor on jobs when standard hours were 15,200. 5. Applied overhead to jobs at the rate of 100% of direct labor cost for standard hours allowed. Journalize the January transactions. (Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Account Titles and Explanation Debit Credit 1. 2. 3. 4. 5. Click if you would like to Show Work for this question: Open Show Work

Answer 1

Journal entries
Event	Account title	Debit	Credit
1	Direct material inventory (18600*3.20)	59,520
	Direct material price variance	5,580
	Account payable (18600*3.50)		65,100
	(To record direct material price variance with purchased of inventory.)
2	Work in progress inventory (18380*3.20)	58,816
	Direct material usage variance	704
	Direct material inventory (18600*3.20)		59,520
	(To record direct material usage variance with inventory used for production.)
3	Factory Labor (15000*5.20)	78,000
	Labor rate variance		7,500
	Factory Wages Payable (15000*4.70)		70,500
	(To record Incurred 15,000 actual hours of direct labor at an actual rate of $4.70 per hour. The standard rate is $5.20 per hour.)
4	Work in progress inventory (15200*5.20)	79040
	Labor quantity (efficiency) variance		1,040
	Factory Labor (15000*5.20)		78,000
	(To record Performed 15,000 hours of direct labor on jobs when standard hours were 15,200.)
5	Work in progress inventory	79040
	Manufacture overhead (or Factory overhead)		79,040
	(To record Manufacture overhead Applied to Job.) (79040*100%)

Summary of Answer
Material
Material price variance	5,580	Unfavorable
Material quantity variance	704	Unfavorable
Labor
Labor price (rate) variance	7,500	Favorable
Labor quantity (efficiency) variance	1,040	Favorable

	Minus sign indicate Favorable variance.
	Measure	unit
	Standard price per unit	$            3.20
	Actual price per unit	$            3.50
	Standard quantity in units	18,380
	Actual quantity purchased in units	18,600
	Actual quantity used in units	18,600
	Actual price per unit	3.50
Less	Standard price per unit	-3.20
	Difference	0.30
Multiply	Actual quantity purchased in units	18600
	Material price variance	$          5,580
	Indicate	Unfavorable
	Actual quantity used in units	18600
Less	Standard quantity in units	-18380
	Difference	220
Multiply	Standard price per unit	3.20
	Material quantity variance	$              704
	Indicate	Unfavorable

	Minus sign indicate Favorable variance.
	Measure	Hour
	Standard rate per Hour	$              5.20
	Actual rate per Hour	$              4.70
	Standard labor Hours	15,200
	Actual labor Hours	15,000
	Actual rate per Hour	4.70
Less	Standard rate per Hour	-5.20
	Difference	-0.50
Multiply	Actual labor Hours	15000
	Labor price (rate) variance	$          (7,500)
	Indicate	Favorable
	Actual labor Hours	15000
Less	Standard labor Hours	-15200
	Difference	-200
Multiply	Standard rate per Hour	5.20
	Labor quantity (efficiency) variance	$          (1,040)
	Indicate	Favorable