Question

(Appendix 10A) Journal Entries Journal Instructions Chart of Accounts X Instructions Deporte Company produces single-colored t-shirts. Materials for the shirts are dyed in large VEts. After dying the materials for a given color, the vats must be cleaned and prepared for the next batch of materials to be colored. The following standards for changeover for a given batch have been established: Journal Direct materials (2.8 lbs.@$0.80 $2.24 Direct labor (0.75 hr@ $7.8) 5.85 10 $8.09 3Standard prime cost 1 13 During the year, 79,300 pounds of material were purchased and used for the changeover activily. There were 26,000 batches produced, with the following actual prime costs: 14 Direct materials $50,946 Direct labor (for 19,457 hrs.) $149.386 Required: 1. Prepare a jounal entry on Dec. 31 for he purchase of raw materials. Record the transaclion as a compound entry. 2. Prepare a jounal entry on Dec. 31 far the issuance of raw matenials. Record the transaction as a campound entry. 3. Prepare a oumal entry on Dec. 31 for the addition of labor to Work in Process. Record the fransaction as a compound entry variances to Cost of Goods Sold. Rocord the bransaction as a compound entry 4. Prepare a jounal entry on Dec. 31 for the closing

Answer 1

JOURNAL
	Account Titles	Debit	Credit
1	Materials (79300 x $0.80)	63440
2	Materials price variance		12494
3	Cash/Accounts payable#		50946
4	Work in process (26000 x $2.24)	58240
5	Materials usage variance	5200
6	Materials (79300 x $0.80)		63440
7	Work in process (26000 x $5.85)	152100
8	Labor rate variance*		2378.60
9	Labor efficiency variance**		335.40
10	Cash/Accrued payroll#		149386
11	Materials price variance	12494
12	Labor rate variance	2378.60
13	Labor efficiency variance	335.40
14	Materials usage variance		5200
15	Cost of goods sold		10008

# Kindly credit as required since it is not given whether the transactions are for cash or on account/accrued.

*Labor rate variance = (AH x AR) - (AH x SR) = $149386 - (19457 x $7.8) = $2378.60 Favorable

**Labor efficiency variance = (AH x SR) - (SH x SR) = (19457 x $7.8) - (19500 x $7.8) = $335.40 Favorable

SH = 26000 x 0.75 = 19500

Kindly round off the labor variances as required since no instructions have been provided with the question regarding rounding off.