Question

Hart Company made 3,900 bookshelves using 30,000 board feet of wood costing $390,000. The company's direct materials standards for one bookshelf are 8 board feet of wood at $12.90 per board foot.

Hart Company records standard costs in its accounts and its materials variances in separate accounts when it assigns materials costs to the Work in Process Inventory account.

(1) Prepare the journal entry that both charges the direct materials costs to the Work in Process Inventory account and records the materials variances in their proper accounts.
(2) Assume that Hart's materials variances are the only variances accumulated in the accounting period and that they are immaterial. Prepare the adjusting journal entry to close the variance accounts at period-end.

Answer 1

1
	Debit	Credit
Goods in process inventory	402480		=3900*8*12.9
Direct materials price variance	3000		=390000-(30000*12.9)
Direct materials quantity variance		15480	=12.9*(30000-3900*8)
Raw materials inventory		390000
2
	Debit	Credit
Direct materials quantity variance	15480
Direct materials price variance		3000
Cost of goods sold		12480