Figure 10-7. During April,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.Its standard quantity of this type of shingle is 725 bundles.
Refer to Figure 10-7.What is the journal entry to record the purchase of materials?

Question

Quizplus · Accepted Answer

The cost of 700 bundles at $35 each is $24,500 ($35 x 700). However, the standard price is $27 ($35 - $8), so there is a price variance of $8 per bundle ($35 - $27). The total price variance is therefore $5,600 ($8 x 700). The journal entry to record the purchase would be:
Materials             $24,500
Materials Price Variance   $5,600
Accounts Payable          $18,900. 
Therefore, the correct answer is option C.