Exercise 14-56 - Journal Entries in a Standard Cost System

Exercise 14-56 - Journal Entries in a Standard Cost System
Boron Chemical Company produces a synthetic resin that is used in automotive industry. The company uses a standard cost system. For each gallon of output, the following direct manufacturing cost are anticipated:

Direct Labor: 2 hours at $ 25.00 per hour            $50.00
Direct materials: 2 Gallons at $10.00 per gallon     $20.00

During December of 2010, Boron produced a total of 2,500 gallons of output and incurred the following direct manufacturing costs:

Direct Labor: 4900 hours worked. an average worked rate of 19.50 per hour.
Direct Materials:  Purchased: 6,000 gallons. 10.45 per gallon. Used in production: 5,100 gallons

Boron record price variances for materials at the time of purchase.

Give an journal entries for the following events and transactions;

1. Purchase, on credit,of direct materials.
2. Direct materials issued to production.
3. Direct Labor cost of units completed this period.
4. Direct Manufacturing cost(direct labor plus direct materials) of units completed and transferred to Finished Goods Inventory.
5. Sales for $150 per gallon of 2,000 gallons of output( Will need to journal entries here.)