Reference no: EM132873458

Problem 1 - The Lubbock plant of Morril's Small Motor Division produces a major subassembly for a 6.0 horsepower motor for lawnmowers. The plant uses a standard costing system for production costing and control. The standard cost sheet for the subassembly follows: During the year, the Lubbock plant had the following actual production activity:

a. Production of subassemblies totaled 50,000 units.

b. A total of 260,000 pounds of raw materials was purchased at $4.70 per pound.

c. There were 60,000 pounds of raw materials in beginning inventory (carried at $5 per lb.). There was no ending inventory.

d. The company used 82,000 direct labor hours at a total cost of $1,066,000.

The Lubbock plant's practical activity is 60,000 units per year. Standard overhead rates are computed based on practical activity measured in standard direct labor hours.

Required - Prepare all possible journal entries.

Problem 2 - Moleno Company produces a single product and uses a standard cost system. The normal production volume is 120,000 units; each unit requires 5 direct labor hours at standard. Overhead is applied on the basis of direct labor hours. The budgeted overhead for the coming year is as follows: FOH At normal volume. VOH During the year, Moleno produced 118,600 units, worked 592,300 direct labor hours, and incurred actual fixed overhead costs of $2,150,400 and actual variable overhead costs of $1,422,800.

Required - Calculate the standard fixed overhead rate and the standard variable overhead rate.