Problem T411 Weter Movers Inc s known throughout the world f

Problem T4-11 Weter Movers, Inc. s known throughout the world for its H20-X high-capecity water pump, used in irrigation systems. The compeny uses a standard costing system, and the pumps standard cost is as follows. The company\'s predetermined fixed overhead rate is besed on an axpacted apacity of 100,000 direct labor hours per month Standard Price Standard Standard Quantity Cost $90 36 32 20 5178 Direct materias $6 per pound 15 pounds Direct labor $9 per DLH $8 per DLH $5 per DLH 4DLH 4DLH 4 DLH Fixed overhead During the month of September, the company produced 22,00D af the 25,000 pumps that had been scheduled for production in the budget. The company used 382,000 pounds of material during September. The direct labor payrall for the month was $940,000 for 94,000 direct labor hours. variable overhead costs were $740,000; nxed overhead costs were540,000. The company\'s purchasing agent signed a new supply contract that resulted in purchases of 500,000 pounds af direct materials at a price of $2,750,000 on account. (a) Prepare the journal entries to record the purchase and use of direct materials during September. (Credit account tities are automatically indented when amount is entered. Do not indent manualy.) No. Account Tities and Explanation 1. Debit Credit (To record the purchase of material) 2. To record the use of material) (b) Prepare the journal entry to record the direct labor payroll for September. (Credit account titles are automatically Indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit To record direct labor)

Solution

As per policy, only four parts of a question is allowed to answer, so answering a - d :

Journal entries :

Date	Accounts Titles and description	Debit $	Credit $
a 1	Material	2750000
	Accounts Payable		2750000
	(being material purchased on account)
a 2	WIP	2101000
	Material		2101000
	(material used = 2750000 * 382000 / 500000 = 2101000)
b	WIP	940000
	D L Payroll		940000
	(being the Direct labor utilised )
c	Manufacturing Overhead	740000
	Cash		740000
	(being variable overhead incurred)
d	WIP	704000
	Manufacturing Overhead		704000
	(Being manufaturing overhead applied 22000*4 * $8 = %704000 )