The standard operating capacity of Corona manufacturing Co. is 1,000 units. A detailed study of the manufacturing data relating to the standard production cost of one product revealed the following:
1. two pounds of materials are needed to produce one unit.
2. the standard unit cost of materials is $8 per pound.
3. it takes 1 hour of labor to produce one unit.
4. standard labor rate is $10 per hour.
5. standard overhead for this volume is $4,000.
a. Set up a standard cost summary showing the standard unit cost.
b. analyze the variances for labor and material.
C. make journal entries to record the transfer to work and process of :
1.materials cost
2. labor costs
3. overhead costs (when making these entries included the variances)
D. prepare the journal entry to record the transfer of cost to the finished goods account.
Question 1:
1,000 units were started and finished
Case 1: all prices and quantities for the cost elements are standard, except for materials cost, which is $8.50 per pound.
Case 2: all prices and quantities for the cost elements are standard, except that 1,900 lb of materials were used.
Question 2
1,000 units were started and finished
Case 1: all prices and quantities are standard, except for the labor rate, which is $10.20 per hour.
Case 2: all prices and quantities are standard, except for labor hours, which totaled 900.
Question 3
All of the deviations listed in the two above questions took place and 900 units were started and finished.