The Fox Company Uses a Standard Cost Accounting System and Estimates

question 79

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:
$$\begin{array} { l r } \text { Nurnber of units produced } & 6,000 \\\text { Materials purchased (18,500yards) } & \$ 88,800 \\\text { Materials used in production (yards) } & 18,500 \\\text { Variable overhead costs incurred } & \$ 6,380 \\\text { Fixed overhead costs incured } & \$ 20,400 \\\text { Direct labor cost incurred (\$6.50/hour) } & \$ 75,400\end{array}$$
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.

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Definitions:

Posterior Cerebral Artery

A blood vessel at the back of the brain that supplies oxygen-rich blood to the occipital lobe, important for visual processing.

Occipital Lobe

Situated at the back part of the head, this brain region is dedicated to analyzing visual data.

Gray Matter

The darker-colored regions of the brain and spinal cord, consisting mainly of neuronal cell bodies and lacking myelin, involved in muscle control and sensory perception.

Capillaries

Capillaries are the smallest blood vessels in the body, responsible for the exchange of oxygen, carbon dioxide, and other nutrients and wastes between blood and tissues.