The normal capacity of Austin Adhesives, Inc., is 40,000 direct labor hours and 20,000 units

The normal capacity of Austin Adhesives, Inc., is 40,000 direct labor hours and 20,000 units per month. A finished unit requires 6 pounds of materials at an estimated cost of $2 per pound. The estimated cost of labor is $10.00 per hour. The plant estimates that overhead for a month will be $40,000.
During the month of March, the plant totaled 34,800 direct labor hours at an average rate of $9.50 an hour. The plant produced 18,000 units, using 105,000 pounds of materials at a cost of $2.04 per pound.

1. Prepare a standard cost summary showing the standard unit cost.
2. Make journal entries to charge materials and labor to Work in Process.

Here’s the SOLUTION

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