Question

PART I. Identify the order in which the following budgets are prepared within the master budget process: Production, Labor, Materials Purchased, Sales, Forecasted Balanced Sheet, Cash Budget, Forecasted Income Statement 1. 2. 3. 4. 5, 6 7. PART II. Napa Winery uses a standard costing system based upon a normal capacity of 35,000 cases per month. Operating data for March was as follows: Labor paid to employees $125,000 Materials price variance (unfavorable) Grapes Purchased and used $60,000 Actual overhead incurred $162,500 $1,500 Labor rate variance (favorable) $600 Materials quantity variance (favorable) $1,200 Controllable overhead variance (unfavorable) Labor efficiency variance (unfavorable) $500 900 Overhead volume variance (unfavorable) $1,000 What is the journal entry to record grapes purchased if the variance is isolated at time of purchase? hat is the journal entry to record the requisition of the grapes into production?

Answer 1

Answer is given below

Part 1 Order of Budgets Sales Production Materials Purchased Labor Cash Budget Forecasted Income Statement Forecasted Balance Sheet Sales Budget is the first budget required and basis for all budgets Based on Sales Budget production budget is prepared Production budget gives Materials required for production and purchase Labor budget is for production Cash Budget is for Cash receipts and Cash payments Income statement is for finding net income/loss Balance Sheet is for Assets and Liabilities forecasted Part II Credit Debit $60,000 Journal Material Inventory To Accounts payable (Being Grapes purchased) $60,000 $60,000 $60,000 Work in process To Material Inventory (Being Material issued to production)