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?

Question

Quizplus · Accepted Answer

The journal entry to record the use of materials is a debit to Work in Process Inventory for the standard cost of the materials used (2 pounds x $13 per pound x 4,800 units = $124,800), and a credit to Raw Materials Inventory for the actual cost ($135,000). Therefore, the correct journal entry is:
Work in Process Inventory  $124,800
Raw Materials Inventory        $135,000

Tulip Inc Uses Standard Costing, and Its Manufacturing Standards Are as as Follows