Brisson Company Case Study

Case 19-3 Brisson Company Approach This trouble takes the student through a pinpoint cycle of transactions in a measure cost system in a simple setting. It shows how such a system works, including the development of versions, and ties cost report to the accounting cycle the student learned in Part 1 of the book. (Brissons system is the same as the ane depicted in Illustration 19-2. ) This seems to be a valuable exercise, especially in helping to minimize the omnipresent problems students turn in with production cost variance summary in the next chapter.If not institutionalize for class, this makes a good exam case. (For restraint in grading, I suggest you manipulate forms with all needed T accounts preprinted on them. ) scruple 1 tangibles Inventory manoeuver in Process Inventory Bal. 50,250 (4) 118,810 Bal. 75,600 (9) 267,684 (2) 104,980 36,420 (4) 116,696 Bal. 36,420 (5a,8) 79,200 (8) 99,000 102,812 sunk Goods Inventory Bal. 102,812 Bal. 155, 400 (10b) 232,602 (9) 267,684 190,482 Bal. 190,482 Accounts Payable altogether another(prenominal) Assets (3a) 102,300 Bal. 104,700 Bal. 325,500 (3a) 102,300 (2) 103,535 (3b) 192,000 (3b) 192,000 143,435 (6) 37,500 (10a) 375,150 (5b) 116,700 Bal. 143,435 (6) 18,300 (7) 78,750 All Other Liabilities 384,600 Bal. 47,250 Bal. 384,600 Overhead allowance Payable (5a) 40,500 (8) 99,000 (5b) 116,700 Bal. 6,150 (6) 55,800 2,250 (5a) 112,800 (11) 2,700 Bal. 2,250 Overhead Variance Shareholders beauteousness (14) 2,700 (11) 2,700 Bal. 448,650 521,379 (19) 72,729 Bal. 521,379 Labor Variance Material footing Variance (16) 6,900 (5a,8) 6,900 (15) 1,445 (2) 1,445 gross sales Material habitude Variance (12) 375,150 (10a) 375,150 (4) 2,114 (17) 2,114 Selling and Admin. Expense Income thickset (7) 78,750 (18) 78,750 (13) 232,6 02 (12) 375,150 (17) 2,114 (14) 2,700 (18) 78,750 (15) 1,445 Cost of Sales (19) 72,729 (16) 6,900 (10b) 232,602 (13) 232,602 Notes on entries (numbered to discipline to the case transactions) (2) 2,500 $29. 80 + 1,000 $30. 48 = $104,980 std. $104,980 $103,535 = $1,445 quotation (favorable) price variance. Favorable price variances practically arise in the first one- fractional of the year the standard is set to recreate the annual average, and with inflation, prices volition tend to be below this average for the first 6 months and above it in the latter half f the year. (3b)The debit reflects an increase in Cash the credit represents the decrease in Accounts Receivable. (3) 3,200 $29. 80 + 700 $30. 48 = $116,696 for original issues positive extra (replacement) issues as follows 100 $12. 37 + 20 $11. 25 + 45 $10. 80 + 20 $6. 63 + 4 $8. 43 = $2,114 (an (4) unfavorable usage variance) giving occur issues of $118,810. (Note Some students may cla im that the $2,114 in extra materials issues were to replace materials that were defective, as strange to replacing good items that were spoiled in the production places.Such students may treat this $2,114 as an overhead cost if so, they allow wealthy person $0 material usage variance and $586 favorable overhead variance. ) (5a)This entry stumps umteen students, at least temporarily. Some will cleverly set up a comprehend modify account like to the overhead clearing account, and then charge the standard labor to this account at entry (8) the balance in this labor clearing account will be $6,900 dr. , which is closed to Labor Variance. Other students will do what Ive done hitherread ahead to entry (8), and descend the labor variance as place of the entry. 9)3,000 $70. 30 + 800 $70. 98 = $267,684 (10b)2,400 $70. 30 + 900 $70. 98 = $232,602 cost of sales (11)This closes the overhead clearing account. (12)-(19) These entries close the temporary accounts and income summary. Question 2 BRISSON COMPANY Income Statement Month of April Sales revenue $375,150 Cost of sales standard 232,602 Standard gross leeway 142,548 achievement cost variances* 8,931 Actual gross margin 151,479 Selling and administrative expense 78,750 Income $ 72,729 * fruit cost variances Martial price $1,445F Material usage 2,114U Labor 6,900F Overhead 2,700F $8,931F Question 3 BRISSON COMPANY Balance canvass As of April 30 Assets Liabilities and Shareholders Equity Materials breed $ 36,420 Accounts payable $143,435 Work in cognitive process inventory 102,812 Wages payable 2,250 correct goods inventory 190,482 All other liabilities 47,250 All other asses 384,600 Shareholders equity 521,379 $714,314 $714,314