Tulip Inc.uses standard costing,and its manufacturing standards are as follows: 2 pounds of materials at $13 per pound,and 3 hours of labor at $10 per hour.Budgeted production last period was 5,000 units,and actual production was 4,800 units.Last period,Tulip purchased and used 9,800 pounds of materials for $135,000,and used 15,000 labor hours,costing $145,000.What is the journal entry to record the use of materials?
A)Option A
B)Option B
C)Option C
D)Option D

Question

Tulip Inc.uses standard costing,and its manufacturing standards are as follows: 2 pounds of materials at $13 per pound,and 3 hours of labor at $10 per hour.Budgeted production last period was 5,000 units,and actual production was 4,800 units.Last period,Tulip purchased and used 9,800 pounds of materials for $135,000,and used 15,000 labor hours,costing $145,000.What is the journal entry to record the use of materials? 
A)Option A 
B)Option B 
C)Option C 
D)Option D

Quizplus · Accepted Answer

The journal entry to record the use of materials under standard costing is:

Work in process inventory   $25,200 (2 lbs x $13 x 4,800 units)
Materials price variance       $9,800 (9,800 actual – 9,600 standard x $13)
Raw materials inventory        $135,000

Option A is incorrect because it only records the materials purchased, but not their use in production.

Option C is incorrect because the entry overstates the materials price variance by using the actual labor hours instead of the standard hours.

Option D is incorrect because it only records the materials purchased, but not their use in production, and it also understates the materials price variance.

Tulip IncUses Standard Costing,and Its Manufacturing Standards Are as Follows: 2