During March, a small roofing company purchased 700 bundles of a certain type of shingle at a price of $35 per bundle, $8 more than the standard price. The company's standard quantity of this type of shingles is 725 bundles.
-Refer to the Figure.What is the journal entry to record the issuance and usage of materials?
A)Work in Process 18,900Materials Usage Variance 675Materials 19,575
B)Work in Process 19,575Materials Usage Variance 675Materials 18,900
C)Work in Process 24,500Materials Usage Variance 875Materials 25,375
D)Work in Process 25,375Materials Usage Variance 875Materials 24,500

Question

Quizplus · Accepted Answer

The cost of materials issued for the job is calculated as follows:

Standard cost of 725 bundles at $27 per bundle = $19,575 
Actual cost of 700 bundles at $35 per bundle = $24,500

Material usage variance = Actual cost - Standard cost = $24,500 - $19,575 = $4,925 unfavorable

The journal entry to record the issuance and usage of materials is:

Debit Work in Process $19,575
Debit Materials Usage Variance $675
Credit Materials $18,900

Therefore, the correct answer choice is B.

During March, a Small Roofing Company Purchased 700 Bundles of a Certain