The Fox Company Uses a Standard Cost Accounting System and Estimates

Essay

The Fox Company uses a standard cost accounting system and estimates production for the year to be 60,000 units.At this volume,the company's variable overhead costs are $0.50 per direct labor hour.The company's single product has a standard cost of $30.00 per unit.Included in the $30.00 is $13.20 for direct materials (3 yards)and $12.00 of direct labor (2 hours).Production information for the month of March follows: $$\begin{array} { | l | r | } \hline \text { Number of units produced } & 6,000 \\\hline \text { Materials purchased (18,500 yards) } & \$ 88,800 \\\hline \text { Materials used in production bards) } & 18,500 \\\hline \text { Variable overhead costs incurred } & \$ 6,380 \\\hline \text { Fixed overhead costs incurred } & \$ 20,400 \\\hline \text { Direct labor cost incurred (\$6.50/hour) } & \$ 75,400 \\\hline\end{array}$$
Required:
Prepare the journal entries to record the following:
a.Incurring actual overhead.b.Application of overhead to production.c.Closing of overhead accounts and recognizing variances.d.Transferring production to finished goods.