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. 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: Grapes Purchased and used $60,000 Actual overhead incurred $162,500 Materials quantity variance (favorable) $1,200 Labor paid to employees $125,000 Materials price variance (unfavorable) $1,500 Labor rate variance (favorable) $600 Controllable overhead variance (unfavorable) $500 Labor efficiency variance (unfavorable) $900 Overhead volume variance (unfavorable) $1,000 1 What is the journal entry to record grapes purchased if the variance is isolated at time of purchase?

Answer 1

Answer is given below

PartI Order of Budgets Sales 1 Production 2 Materials Purchased Labor Cash Budget 5 Forecasted Income Statement 6 Forecasted Balance Sheet 7 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 based on Production budget Cash Budget is for Cash receipts and Cash payments and see if any borrowing is needed Income statement is for finding net income/loss Balance Sheet is for Assets and Liabilities forecasted Part Il Journal Credit Debit Material Inventory To Accounts payable |(Being Grapes purchased) $60,000 $60,000