Question Details

Calais Company's fixed budget for the first quarter of the calendar year 




1.Chips Co. assigned direct labor cost to its products in May for 1,300 standard hours of direct labor at
the standard $8 per hour rate. The direct labor rate variance for the month was $200 favorable and the
direct labor efficiency variance was $150 favorable. Prepare the journal entry to charge Goods in Process
Inventory for the standard labor cost of the goods manufactured in May and to record the direct labor
variances. Assuming that the direct labor variances are immaterial, prepare the journal entry that Chips
would make to close the variance accounts.


2.Calais Company's fixed budget for the first quarter of the calendar year appears below. Prepare flexible
budgets that show variable costs per unit, fixed costs and two different flexible budgets for sales volumes


Sales (20,000 units)…………………………………		         $800,000
Cost of goods sold:		
     Direct materials………………………………….	   $160,000	
     Direct labor………………………………………	     140,000	
     Variable Overhead ………………………………	     100,000	          
     Fixed overhead…………………………………..	      120,000	         520,000
     Gross profit……………………………………..		        $280,000
Selling expenses:		
     Sales commissions (all variables)………………..	     40,000	
     Advertising  ( all fixed)…………………………..	     50,000	
General and administrative expenses:		
     Salaries ( all fixed)……………………………….	     90,000	
     Rent ( all fixed)…………………………………...	     30,000	
     Depreciation ( all fixed)…………………………..	     20,000	         230,000
Net Income from operations………………………….		       $  50,000

of 22,000 and 24,000.




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