Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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Chapter 11, Problem 15E
Potter Company has installed a JIT purchasing and manufacturing system and is using back-flush accounting for its cost flows. It currently uses a two-trigger approach with the purchase of materials as the first trigger point and the completion of goods as the second trigger point. During the month of June, Potter had the following transactions:
There were no beginning or ending inventories. All goods produced were sold with a 60 percent markup. Any variance is closed to Cost of Goods Sold. (Variances are recognized monthly.)
Required:
- 1. Prepare the
journal entries that would have been made using a traditional accounting approach for cost flows. - 2. Prepare the journal entries for the month using backflush costing.
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Students have asked these similar questions
Maney Televisions utilizes a traditional overhead allocation method, and has determined that overhead costs are driven by direct labor hours. Relevant cost information is provided below.
Total estimated overhead costs
$650,000
Total estimated DL hours
130,000
Actual overhead costs
$640,300
Actual DL hours
127,500
The unadjusted cost of goods sold balance at the end of the year is $56,000.
What is the overhead variance? Please provide your answer as a positive number rounded to the nearest whole dollar.
ABC Industries uses a cost system that carries direct materials inventory at a standard cost. The controller has established these standards for the cost of one basket (unit):
ABC Industries made 3,000 baskets in July and used 15,500 pounds of material to make these units. ABC Industries paid $39,370 for the 15,500 pounds of material.
What was the direct materials price variance for July?
What was the direct materials quantity variance for July?
What is the total direct materials cost variance?
Standard Quantity x
Standard price =
standard cost
direct materials
5 pounds
$2.60 per pound
$18.00
Direct labor
1.25 hours
$12.00 per hour
$15.00
total prime cost
$33.00
Elm Industries uses a standard cost accounting system. During the month of May, Elm's actual total
direct labor costs are $51,450. The direct labor rate variance is $1,800 unfavorable, and the direct
labor efficiency variance is $750 favorable. What is the total amount of direct labor costs that Elm
applies to its work in process inventory for the month of May?
O $50,400
O $51,450
O $52,500
$53,250
O None of the above
Chapter 11 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 11 - What does it mean to obtain a competitive...Ch. 11 - What is customer value? How is customer value...Ch. 11 - Prob. 3DQCh. 11 - What are organizational and operational...Ch. 11 - What is the difference between a structural cost...Ch. 11 - What is value-chain analysis? What role does it...Ch. 11 - Prob. 7DQCh. 11 - What are the three viewpoints of product life...Ch. 11 - What are the four stages of the marketing life...Ch. 11 - Prob. 10DQ
Ch. 11 - What are the four stages of the consumption life...Ch. 11 - Life-cycle cost reduction is best achieved during...Ch. 11 - Prob. 13DQCh. 11 - Prob. 14DQCh. 11 - Prob. 15DQCh. 11 - Woodruff Company is currently producing a...Ch. 11 - Ventana Company is a car window repair and...Ch. 11 - Deeds Company sells custom-made machine parts to...Ch. 11 - Kagle design engineers are in the process of...Ch. 11 - Hepworth Company has implemented a JIT system and...Ch. 11 - Keith Golding has decided to purchase a personal...Ch. 11 - Prob. 7ECh. 11 - Classify the following cost drivers as structural,...Ch. 11 - Prob. 9ECh. 11 - Prob. 10ECh. 11 - Assign the customer-related activity costs to each...Ch. 11 - The following series of statements or phrases are...Ch. 11 - Assume that a company has recently switched to JIT...Ch. 11 - Prob. 14ECh. 11 - Potter Company has installed a JIT purchasing and...Ch. 11 - Potter Company has installed a JIT purchasing and...Ch. 11 - Potter Company has installed a JIT purchasing and...Ch. 11 - Prob. 18ECh. 11 - Which of the following is a true statement about...Ch. 11 - Prob. 20ECh. 11 - This year, Hassell Company will ship 4,000,000...Ch. 11 - Prob. 22ECh. 11 - The second stage of customer-based activity-based...Ch. 11 - Evans, Inc., has a unit-based costing system....Ch. 11 - Cortalo, Inc., manufactures riding lawn mowers....Ch. 11 - Moss Manufacturing produces several types of...Ch. 11 - Maxwell Company produces a variety of kitchen...Ch. 11 - Prob. 28PCh. 11 - Nico Parts, Inc., produces electronic products...Ch. 11 - Jolene Askew, manager of Feagan Company, has...Ch. 11 - Homer Manufacturing produces different models of...Ch. 11 - Mott Company recently implemented a JIT...Ch. 11 - Southward Company has implemented a JIT flexible...Ch. 11 - Prob. 34P
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