Cost Management: A Strategic Emphasis 7th Edition by Edward Blocher,David Stout ,Paul Juras,Gary Cokins

Exercise 15

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

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

Boron records price variances for materials at the time of purchase.
Required Prepare 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. Sale, for $150 per gallon, of 2,000 gallons of output. ( Hint: You will need two journal entries here.)