Saskatewan Can Company manufactures recyclable softdrink can

Saskatewan Can Company manufactures recyclable soft-drink cans. A unit of production is a case of 12 dozen cans. The following standards have been set by the production-engineering staff and the controller.

  

Actual material purchases amounted to 240,000 kilograms at $.81 per kilogram. Actual costs incurred in the production of 50,000 units were as follows:

Required:

Prepare the following journal entries. (If no entry is required for a transaction/event, select \"No journal entry required\" in the first account field. Do not round intermediate calculations.)

Direct Labor:	Direct Material:
Quantity, 0.25 hour	Quantity, 4 kilograms
Rate, $16 per hour	Price, $0.80 per kilogram

Journal entry worksheet 2 4 Record the purchase of direct material on account and the direct-material purchase price variance. Note: Enter debits before credits. Transaction General Journal Debit Credit Record entry Clear entry View general journal

Solution

Std qty allowed for actual output (50000*4): 200,000 Std price per kg: $ 0.80 per kg Actual Qty purchased: 240,000 kgs Actual qty used: 210,000 kgs Actual price per kg: 0.81 per kg Material Price variance: Actual Qty purchased (Std price -Actual price) 240000 (0.80 -0.81) = 2400 Unfav Material Qty variance: Std price (Std qty-Actual qty) 0.80 (200,000 -210000) = 8000 Unfav Std labour hours (50000*0.25): 12500 hours Std rate per hour: 16 per hour Actual Labour cost: $ 211900 Labour cost variance: Std hours *Std rate   -   Actual labour cost 12500 *16 - 211900 =11900 Unfav Journal entry Accounts title and explanations Debit $ Credit $ Raw material inventory Account Dr. (240000*0.80) 192000 Direct material price variance Dr. 2400      Accounts payable 194400 Work in process inventory Account Dr. (200000*0.8) 160000 Material Quantity variance Account Dr. 8000     Raw material Inventory Account 168000 Work in process inventory Account Dr. (12500*16) 200000 Labour cost variance Account Dr. 11900       Wages payable 211900 Cost of Goods sold Account Dr. 22300     Material price variance Account 2400     Material Quantity Vvariance Account 8000     Labour cost variance Account 11900