1Atlantic Manufacturing Company uses standard costing methodology in their journal entries and accounts. Standards for direct materials are as follows:
Pounds per unit2.0Price per pound$5.00
Atlantic plans to produce 3,000 units of product, and has just purchased 10,000 pounds of raw materials for a net cost of $48,000. The journal entry to record this transaction would be to:
A) debit Materials inventory $50,000, credit Accounts payable $48,000, credit Materials Price Variance $2,000.
B) debit Materials inventory $48,000, credit Accounts payable $48,000.
C) debit Materials inventory $50,000, credit Accounts payable $50,000, credit Materials Price Variance $2,000.
D) debit Materials price variance $2,000, debit Materials inventory $48,000, credit Accounts payable $50,000.
2Atlantic Manufacturing Company uses standard costing methodology in their journal entries and accounts. Standards for direct materials are as follows:
Pounds per unit2.0Price per pound$5.00
Actual purchases of materials for the current month are as follows: 10,000 pounds for $48,000
Planned production for the month: 3,000 units
Atlantic has just issued 10,000 pounds of raw materials to production. The journal entry to record this transaction would be to:
A) debit WIP $28,800, credit Materials inventory $30,000, debit Materials efficiency variance $1,200.
B) debit WIP $28,800, credit Materials inventory $50,000, debit Materials efficiency variance $28,750.
C) debit WIP $30,000, credit Materials inventory $50,000, debit Materials efficiency Variance $20,000.
D) debit WIP $50,000, credit Materials inventory $48,000, credit Materials efficiency variance $50,000.
3Atlantic Manufacturing Company uses standard costing methodology in their journal entries and accounts. Standards for direct labor are as follows:
Hours per unit0.5Price per hour$18.00
Actual direct labor for the month: 1,200 hours for a total cost of $24,000
Planned production for the month: 3,000 units
The journal entry to record the payment of direct labor wages would be to:
A) debit Manufacturing wages $21,600, credit Wages payable $24,000, debit Labor efficiency variance $2,400.
B) debit Manufacturing wages $24,000, credit Wages payable $21,600, credit Labor price variance $2,400.
C) debit Manufacturing wages $27,000, credit Wages payable $24,000, credit Labor price variance $3,000.
D) debit Manufacturing wages $21,600, credit Wages payable $24,000, debit Labor price variance $2,400.
1,200 x $18 = $21,600
$24,000 - $21,600 = $2,400
4Atlantic Manufacturing Company uses standard costing methodology in their journal entries and accounts. Standards for direct labor are as follows:
Hours per unit0.5Price per hour$18.00
Actual direct labor for the month: 1,200 hours for a total cost of $24,000
Planned production for the month: 3,000 units
The journal entry to record the usage of direct labor would be to:
A) debit WIP $27,000, credit Manufacturing wages $24,000, credit Labor efficiency variance $2,400.
B) debit WIP $21,600, credit Manufacturing wages $24,000, debit Labor price variance $2,400.
C) debit WIP $21,600, credit Manufacturing wages $27,000, debit Labor efficiency variance $5,400.
D) debit WIP $27,000, credit Manufacturing wages $21,600, credit Labor efficiency variance $5,400.
3,000 x 0.5 = 1,500
1,500 x $18 = $27,000
1,200 x $18 = $21,600
$27,000 - $21,600 = $5,400
5Atlantic Manufacturing Company uses standard costing methodology in their journal entries and accounts. Standards for manufacturing overhead are as follows:
Variable overhead: $30 per direct labor hour
Fixed overhead:$10 per direct labor hour
Actual overhead incurred (variable and fixed): $45,600
Other data provided:
Standards for direct labor are as follows:
Hours per unit0.5Price per hour$18.00
Actual direct labor for the month: 1,200 hours for a total cost of $24,000
Planned production for the month: 3,000 units
The journal entry to allocate overhead (both variable and fixed) to production would be to:
A) debit WIP $60,000, credit Manufacturing overhead $60,000.
B) debit WIP $45,600, credit Manufacturing overhead $45,600.
C) debit WIP $60,000, credit Manufacturing overhead $45,600, credit Variable overhead efficiency variance $14,400.
D) debit WIP $45,600, credit Manufacturing overhead $60,000, debit Variable overhead efficiency variance $14,400.
3,000 x 0.5 = 1,500
1,500 x ($30 + $10) = $60,000
6Atlantic Manufacturing Company uses standard costing methodology in their journal entries and accounts. Atlantic produced 3,000 units of product during the month. Data on standard costs and
actuals are as follows:
Direct materials:
|
Standard
|
Actual
|
Pounds per unit
|
2.0
|
3.3
|
Price per pound
|
$5.00
|
$4.80
|
Materials cost per unit
|
$10.00
|
$16.00
|
Number of units
|
3,000
|
3,000
|
Direct materials cost
|
$30,000
|
$48,000
|
|
|
|
Direct labor:
|
Standard
|
Actual
|
Hours per unit
|
0.5
|
0.4
|
Cost per hour
|
$18.00
|
$20.00
|
Labor cost per unit
|
$9.00
|
$8.00
|
Number of units
|
3,000
|
3,000
|
Direct labor cost
|
$27,000
|
$24,000
|
|
|
|
Variable overhead*
|
Standard
|
Actual
|
Hours per unit
|
0.5
|
0.4
|
Cost per hour
|
$30.00
|
$29.00
|
Variable overhead cost per unit
|
$15.00
|
$11.60
|
Number of units
|
3,000
|
3,000
|
Variable overhead cost
|
$45,000
|
$34,800
|
* allocated on direct labor hours
|
|
|
|
|
|
Fixed overhead*
|
Standard
|
Actual
|
Hours per unit
|
0.5
|
0.4
|
Cost per hour
|
$10.00
|
$9.00
|
Fixed overhead cost per unit
|
$5.00
|
$3.60
|
Number of units
|
3,000
|
3,000
|
Fixed overhead cost
|
$15,000
|
$10,800
|
* allocated on direct labor hours
|
|
|
The journal entry to transfer the cost to Finished goods from Work in process is to:
A) debit WIP $117,600, credit Finished goods $117,600.
B) debit Finished goods $117,000, credit WIP $117,000.
C) debit WIP $117,600, credit Finished goods $117,000, credit WIP variance $600.
D) debit WIP $117,000, credit Finished goods $117,600, debit WIP variance $600.
7For companies using standard costing accounting procedures, when recording the use of direct materials in the production process, Work in process inventory is debited for which of the following?
A) Standard quantity for actual production times standard cost per pound
B) Standard quantity for actual production times actual cost per pound
C) Actual quantity times standard cost per pound
D) Actual quantity times actual cost per pound
8When recording direct labor incurred in the production process, which of the following shows the effect on Work in process inventory?
A) Debit for standard quantity for actual production times standard cost per hour
B) Credit for standard quantity usage for actual production times actual cost per hour
C) Debit for actual quantity times standard cost per hour
D) Credit for standard quantity for actual production times standard cost per hour
9Atlas Manufacturing is closing the year 2012. Atlas uses standard costing methodology in its accounting system and for internal performance reporting. Atlas’s ending balances are shown here:
Sales revenue (standard)
|
|
Sales revenue variance
|
|
Cost of goods sold (standard)
|
|
Selling & admin expenses
|
|
150,000
|
|
4,000
|
|
|
78,000
|
|
|
60,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct materials price variance
|
|
Direct materials efficiency variance
|
|
Direct labor price variance
|
|
Direct labor efficiency variance
|
300
|
|
|
|
25
|
|
800
|
|
|
70
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable overhead spending variance
|
|
Variable overhead efficiency variance
|
|
Fixed overhead spending variance
|
|
Fixed overhead volume variance
|
200
|
|
|
|
800
|
|
|
90
|
|
15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Using the standard costing system, how much is Net operating income?
A) $8,780
B) $6,290
C) $7,100
D) $7,530
10Atlantic Manufacturing Company uses standard costing methodology in their journal entries and accounts. They are ready to close out their Manufacturing overhead account for the month. The T- account for overhead is shown below:
Manufacturing overhead
|
95,000
|
|
|
93,000
|
|
|
|
|
In addition to the above, Atlantic calculated the following overhead variances:
Variable overhead:Spending (price) variance: $5,000 F
Efficiency variance:$4,850 U
Fixed overhead:Spending (price) variance: $1,200 F
Volume variance:$3,350 U
The journal entry to close out the overhead account and record the overhead variances would be:
A)
|
Variable overhead spending variance
|
5,000
|
|
|
Fixed overhead spending variance
|
1,200
|
|
|
Manufacturing overhead
|
2,000
|
|
|
Variable overhead efficiency variance
|
|
4,850
|
|
Fixed overhead volume variance
|
|
3,350
|
|
|
|
|
B)
|
Fixed overhead efficiency variance
|
4,850
|
|
|
Fixed overhead volume variance
|
3,350
|
|
|
Variable overhead spending variance
|
|
5,000
|
|
Variable overhead efficiency variance
|
|
1,200
|
|
Manufacturing overhead
|
|
2,000
|
|
|
|
|
C)
|
Variable overhead spending variance
|
5,000
|
|
|
Fixed overhead spending variance
|
1,200
|
|
|
Manufacturing overhead
|
2,000
|
|
|
Fixed overhead volume variance
|
|
4,850
|
|
Variable overhead efficiency variance
|
|
3,350
|
|
|
|
|
D)
|
Variable overhead efficiency variance
|
4,850
|
|
|
Fixed overhead volume variance
|
3,350
|
|
|
Variable overhead spending variance
|
|
5,000
|
|
Fixed overhead spending variance
|
|
1,200
|
|
Manufacturing overhead
|
|
2,000
|