Question

Wallace Inc, uses a standard cost system and has provided the following information: Standards: Direct materials Direct labor Variable overhead Fixed overhead Per unit 10 lb$2.50lb $25.00 2 hours@ $21.2/hour 42.40 2 hours @$15.9hour 31.80 30.30 $129.50 Total Budgeted production 5,900 units Actual results Material purchased Material used Direct labor Variable overhead Fixed overhead Units $157,705 63,950 lbs 56,700 lbs 10,930 actual hours $237,556 $175,997 $183,180 and sold 5,600 units Prepare the journal entries to record the following transactions. Assume Wallace Inc. does not maintain inventories other than direct materials. (Do not round your intermediate calculations. Round your answers to the nearest whole number. lf no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field.) a. Purchase of direct materials on account. b. Issuance of direct materials to production. c. Incurrence of direct labor d. Incurrence and application of variable overhead. e. Incurrence and application of fixed overhead. 3Answer is not complete No Transaction Debit Credit

Answer 1

Solution:

Journal Entries - Wallace Inc.
Event	Particulars	Debit	Credit
a	Direct material inventory Dr (63950*$2.50)	$159,875.00
	To Accounts payable (340400*$0.69)		$157,705.00
	To Direct material price variance		$2,170.00
	(To record purchase of direct material on account)
b	Work in Process Inventory Dr (5600*10*$2.50)	$140,000.00
	Direct material quantity variance Dr	$1,750.00
	To Direct material inventory (56700*$2.50)		$141,750.00
	(To record use of material into production)
c	Work in process inventory Dr (5600*2*$21.2)	$237,440.00
	Direct labor rate variance Dr	$5,840.00
	To Cash		$237,556.00
	To Direct labor efficiency variance [(11200 - 10930)*$21.2]		$5,724.00
	(To record labor cost used)
d	Work in process inventory Dr (5600*2*$15.9)	$178,080.00
	Variable overhead rate variance Dr	$2,210.00
	To Cash		$175,997.00
	To Variable overhead efficiency variance [(11200 - 10930)*$15.9]		$4,293.00
	(To record incurrance and application of variable overhead)
e	Work in process inventory Dr (5600*$30.30)	$169,680.00
	Fixed overhead spending variance ($183,180 - 5900*$30.30)	$4,410.00
	Fixed overhead Volume variance [(5900-5600)*30.30]	$9,090.00
	To Cash		$183,180.00
	(To record incurrance and application of Fixed overhead)