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Parker Plastic, Inc., manufactures plastic mats to use with rolling office chairs. Its standard cost information...

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Accounting

Parker Plastic, Inc., manufactures plastic mats to use withrolling office chairs. Its standard cost information for last yearfollows:

Standard QuantityStandard Price (Rate)Standard Unit Cost
Direct materials (plastic)12sq ft.$0.68per sq. ft.$8.16
Direct labor0.8hr.$10.70per hr.8.56
Variable manufacturing overhead (based on direct laborhours)0.8hr.$0.85per hr.0.68
Fixed manufacturing overhead $517,000 ÷ 940,000 units)0.55


Parker Plastic had the following actual results for the pastyear:

Number of units produced and sold1,040,000
Number of square feet of plastic used11,960,000
Cost of plastic purchased and used$7,893,600
Number of labor hours worked463,000
Direct labor cost$4,606,850
Variable overhead cost$439,850
Fixed overhead cost$502,000


Required:
1, 2, 3, & 4. Prepare the journal entry to recordParker Plastic's direct materials, direct labor, variable overhead,fixed overhead costs and related variances. Assume the companypurchases raw materials as needed and does not maintain any endinginventories.

1. Record entry for direct materials costs and variances.

2. Record entry for direct labor costs and variances.

3. Record the entry for variable overhead costs andvariances.

4. Record the entry for fixed overhead costs and variances.

Answer & Explanation Solved by verified expert
4.3 Ratings (642 Votes)

Transaction

General Journal

Debit

Credit

1

Cost of Goods Sold

8486400

Direct Materials Price Variance (11960000*((7893600/11960000)-0.68))

239200

Direct Materials Quantity Variance (0.68*(11960000-(1040000*12))

353600

Cash or Accounts Payable

7893600

2

Cost of Goods Sold

8902400

Direct Labor Rate Variance (463000*((4606850/463000)-10.70))

347250

Direct Labor Efficiency Variance (10.70*(463000-(1040000*0.8)))

3948300

Cash or Accounts Payable

4606850

3

Cost of Goods Sold

707200

Variable Overhead Rate Variance (463000*((439850/463000)-0.85))

46300

Variable Overhead Efficiency Variance (0.85*(463000-(1040000*0.8)))

313650

Cash or Accounts Payable

439850

4

Cost of Goods Sold

572000

Fixed Overhead Spending Variance (517000-502000)

15000

Fixed Overhead Volume Variance (0.55*(940000-1040000))

55000

Cash or Accounts Payable

502000

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