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STANDARD COSTING Incorporating Standards into the Accounting Records Pertemuan 6 dan 7

STANDARD COSTING Incorporating Standards into the Accounting Records Pertemuan 6 dan 7. Matakuliah : <<AKUNTANSI BIAYA II>> Tahun : <<2009>>. LEARNING OBJECTIVE. Prepare general journal entries : To record elements of cost at standard amounts To record standard cost variances

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STANDARD COSTING Incorporating Standards into the Accounting Records Pertemuan 6 dan 7

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  1. STANDARD COSTING Incorporating Standards into the Accounting RecordsPertemuan 6 dan 7 Matakuliah : <<AKUNTANSI BIAYA II>> Tahun : <<2009>>

  2. LEARNING OBJECTIVE Prepare general journal entries : To record elements of cost at standard amounts To record standard cost variances To account for complete products at standard costs. To dispose of standard cost variance

  3. Standard Cost Accounting for Materials Purchase of Materials are recorded in one of three ways : • The price variance is recorded when materials are received and placed in stores. Example : Standard unit purchase price … $ 7.5 Purchase ………………………. 10,000 pieces at $ 7.44 Requisitioned …………………... 9,500 pieces SQ allow. for actual production .. 9.336 pieces

  4. Journal Entry for Method 1 • Journal entry to record the purchase and material issued:Materials ($7.5x10,000) $ 75,000 Account Payable ($7.44x10,000) 74, 400 Material Purchase Price Variance($0.06x10,000) 600 . Work In Process ($7.5x9,336) $ 70,020 Materials Quantity Variance($7.5x164) 1,230 Material($7.5x9,500) 71,250

  5. Standard Cost Accounting for Materials 2. Materials are recorded at actual cost when received : the price variance is determined when the materials requisitioned for production. 3. A Combination of Method 1 and 2

  6. Journal Entry for Method 2 • Journal entry when material are purchased : Materials ($7.44x 10,000) ………. $ 74,400 Account Payable ……………… $ 74,400 • Journal entry when material issued : Work In Process ($7.5x9,336) $ 70,020 Materials Quantity Variance($7,5x164) 1,230 Materials ($7,44x9,500) $ 70,680 Materials Price Usage Variance($0,06x9,500) 570

  7. Journal Entry for Method 3 Journal entry to record the purchase : • Materials ($7.5x10,000) $ 75,000 Account Payable ($7.44x10,000) 74, 400 Material Purchase Price Variance($0.06x10,000) 600 Journal entry when materials issued ( 2 journals) . Work In Process ($7.5x9,336) $ 70,020 Materials Quantity Variance($7.5x164) 1,230 Material($7.5x9,500) 71,250

  8. Journal Entry for Method 3 • Journal entry when transfers $ 570 from the purchase price variance account to the price usage variance account. • Material Purchased Price Variance($0.06x9,500) 570 Materials Price Usage Variable 570

  9. Standard Cost Accounting for Labor • Payroll is computed based on clock cards, job tickets, and other information furnished to the payroll department. • Example : • Actual Hours Worked ………………………….. 1,632 • Actual Rate paid per hour ……………………… $ 12.50 • Standard hours allowed for actual production .. 1,504 • Standard rate per hour ………………………….. $ 12.00

  10. Standard Cost Accounting for Labor • Journal entry records the total actual DLH payroll : • Payroll ($ 12.50x1,632) …………… $ 20,400 • Accrued Payroll …………………. $ 20,400 • Journal distributes payroll cost and recognize variances : • Work In Process ($12.00x1,504)…. $ 18,048 • Labor Rate Variance ($0.50x1,632) 816 • Labor Efficiency Variance ($12x128) 1,536 Payroll …………………………… $ 20,400

  11. Standard Cost Accounting for FOH • Actual FOH is measured not only against applied overhead, but also against a budget based on actual activity and a budget based on standard activity allowed for actual production. • Example : • Normal capacity in DLH 1,600 DLH • Total FOH at normal capacity : variable…………………… $ 4,800 fixed ……………………… 19,200 $ 24,000

  12. Example for FOH • FOH rate per direct labor hour : • Variable …………………………. $ 3 • Fixed …………………………….. 12 $ 15 • Actual FOH …………………………. $ 24,442 • Actual DLH …………………………. 1,632 • Standard hours allowed for actual production 1,504

  13. Journal for FOH • Journal entry records actual FOH : • FOH Control ………………………. $ 24,442 • Various Credit …………………. $ 24,442 • Note : various credit = usage of indirect material, indirect labor, and factory cost like acc. depreciation, prepaid insurance, prepaid rent and cash. • Journal entry records applied FOH : • Work In Process ($15x1,504) ….. $ 22,560 • Applied FOH …………………... $ 22,560

  14. Two-Variance Method • The Balance in the FOH control account is divided between the controllable variance and the volume variance. • Journal entry to close the FOH account : • FOH volume variance ($12x96 hours) $1,152 • FOH controlled variance 710 • FOH control ($24,422-$22,560) $ 1,862

  15. Three-Variance Method • The amount of over or under applied FOH is analyzed as spending, variable efficiency and volume variance. • Journal entry to close FOH control: FOH volume variance ($12x60,000)…….. $ 1,152 FOH variable efficiency variance ……….. 384 FOH spending variance …………………. 326 FOH control …………………………… 1,862

  16. Disposition of Variance • Variance can be disposed of in one of two ways : • Variances treated as period expenses • Variances allocated to Cost of Goods Sold and Ending Inventories

  17. CONCLUSION • Standard Cost Accounting for Materials, Labor, and FOH • Standard Cost Accounting for Complete Products • Alternative FOH Methods • Disposition Variance

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