Landlubber Company has established a standard direct material cost of 1.5 gallons @ $2 per gallon for one unit of its product.During the past month,actual production of this product was 6,500 units.The direct materials usage (efficiency)variance was $700 (favorable)and the materials price variance (calculated at point of production)was $470 (unfavorable).The entry to charge Work in Process Inventory for the standard material costs during the month and to record the direct material variances in the accounts would include all the following except:

Question

Quizplus · Accepted Answer

The entry to charge Work in Process Inventory for the standard material costs during the month and to record the direct material variances in the accounts would include:
- A debit to Work in Process Inventory for the standard cost of direct materials used: 6,500 units x 1.5 gallons x $2/gallon = $19,500 (A)
- A credit to Direct Material Usage Variance for the favorable variance: $700 (D)
- A debit to Direct Materials Price Variance for the unfavorable variance: $470 (C)
- A credit to Work in Process Inventory for the actual cost of direct materials used: 6,500 units x actual cost per gallon = $x (E)

However, choice B is incorrect because there is no debit to Direct Materials Inventory. This account is only debited when direct materials are purchased and received into inventory, but in this case, the direct materials have already been used in production.

Landlubber Company Has Established a Standard Direct Material Cost of 1.5