Darren Company Adopted a Standard Cost System Several Years Ago

question 134

Essay

Darren Company adopted a standard cost system several years ago.The standard costs for the prime costs of its single product are as follows:

$$\begin{array} { | l | l | } \hline \text { Material: } 8 \text { klograms } @ \$ 5 \text { per kilogram } & \$ 40.00 \\\hline \text { Labor: } 6 \text { hours } @ \$ 8.20 \text { per hour } & \$ 49.20 \\\hline\end{array}$$ The following operating data were taken from the records for November: $$\begin{array} { | l | l | } \hline \text { Units completed } & 5,600 \text { units } \\\hline \text { Budgeted output } & 6,000 \text { units } \\\hline \text { Purchase of materials } & 50,000 \text { kilograms } \\\hline \text { Total actual labor costs } & \$ 300,760 \\\hline \text { Actual labor hours } & 36,500 \text { hours } \\\hline \text { Material efficiency (quantity) variance } & \$ 1,500 \text { unfavorable } \\\hline \text { Total material variance } & \$ 750 \text { unfavorable } \\\hline\end{array}$$ Required:
Prepare the journal entries to record the following:
a.Purchase and use of direct materials (Assume materials are used as purchased and no inventory is maintained).b.Recognition of direct labor.

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Definitions:

Marginal Utility

The additional satisfaction or benefit gained from consuming one more unit of a good or service.

Consumption Bundle

A combination of goods and services that a consumer chooses to consume at a given time.

Budget Constraint

The limit on the consumption patterns of an individual or household based on their income and the prices of goods and services.

Feasible

Capable of being done or achieved; possible within a set of constraints or conditions.