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Standard Products Company recognizes variences from standards at the earliest opportunity, and the quality of direct...

Standard Products Company recognizes variences from standards at the earliest opportunity, and the quality of direct materials purchased is equal to the quantity used. The following information is available for the most recent month:

Direct Materials Direct Labor
Standard quantity/ unit 6.00 pounds 2.5 hours
Standard price/ pound $8.10 / pound
Standard price / hour $8.00 / hour
Actual quantity / unit 6.25 pounds 2.8 hours
Actual price / pound $8.00 / pound
Actual price / hour $7.50 / hour
Static budget volume 800 units
Actual volume 900 units
Actual overhead $11,000
Actual fixed overhead $5.100
Standard variable overhead $5 / unit
Standard fixed overhead $5,600

Journalize the purchase and usage of direct materials including the related variances.

Business   Accounting   
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Answer #1
Journal Entry-- Record Variance
Date Account Titles Debit Credit
1 Inventory(5625×$8.10) $45,563
Purchase Price Variance (bal) 563
Accounts Payable(5625*×$8) $45,000
TO Record material Purchased
2 WIP (5400*8.10) $43,740
Materials Usage Variance $1,823
Inventory(5625×$8.10) $45,563
TO Record material usage
* Actual Quantity Purchase= 6.25*900= 5625 Pound
Std Quantity for Actual Unit = 6*900= 5400 Pound
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