Question

Rip Tide Company manufactures surfboards. Its standard cost information follows: Standard Price (Rate) $4.9 per sq. ft. $ 14 per hr. Standard Unit Cost $ 86.24 145.60 Standard Quantity Direct materials (fiberglass) 17.6 sq. ft. Direct labor 10.4 hrs. Variable manufacturing overhead (based on direct labor hours) 10.4 hrs. Fixed manufacturing overhead ($ 22,000 - 285 units) $ 5 per hr. 52.00 77.19 Rip Tide has the following actual results for the month of June: Number of units produced and sold Number of square feet of fiberglass used Cost of fiberglass used Number of labor hours worked Direct labor cost Variable overhead cost Fixed overhead cost 190 4,600 $24,840 1,886 $27,536 $ 8,487 $29,500 Required: 1 & 2. Prepare the journal entries to record the direct materials, direct labor costs and related variances for Rip Tide. Assume the company purchases direct materials as needed and does not maintain any ending inventories. (If no entry is required for a transaction/event, select "No Journal Entry Required" in the first account field. Do not round intermediate calculations

Answer 1

Answer
Journal entry
No	Account and Explanation	Debit	Credit
1	Work in process (190*86.24)	$       16,386
	Material quantity variance (4.9*4600-24840)	$         2,300
	Material price variance (190*17.6-4600)*4.9	$         6,154
	Accounts Payable		$     24,840
	(To record direct material cost and variance)
2	Work in process (190*145.60)	$       27,664
	Labour rate variance (14*1886-27536)	$         1,132
	Labour efficiency variance (190*10.4-1886)*14		$       1,260
	Wages Payable		$     27,536
	(To record direct material cost and variance)

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