Garcia Company produces hockey helmets. The standard cost for each helmet is as follows:
Per Helmet
Direct material 5.0 lbs at $4.00/lb. $20.00
Direct labor 2.0 hrs @ $16.00/hr. $32.00
Overhead $10.00
During November, 2,000 helmets were produced. 10,600 lbs. of material were purchased and used during November, at a total cost of $44,520. Labor worked 3,870 hours at an hourly rate of $15.80. Actual overhead was $21,900. The overhead cost of $10.00 per helmet was determined using an estimated monthly fixed overhead of $13,200 and an is $4.00.
Reference: Ref 11-9
Manning uses a standard costing system. At the end of the fiscal year, only the following variance accounts had balances:
Material Price Variance $250 (debit)
Material Quantity Variance $35 (credit)
Labor Efficiency Variance $65 (credit)
Assuming these amounts are not considered significant, the journal entry to close these accounts will include a
credit to Cost of Goods Sold for $150.
debit to Work in Process for $250.
debit to Cost of Goods Sold for $150.
credit to Work in Process for $100.