Atlace Manufacturers uses standard costing system. Standards for direct materials are as follows: Actual purchases of materials for the current month are 10,000 pounds for $48,000. Planned and actual production for the month is 3,000 units. Atlace has issued 10,000 pounds of raw materials to production. The journal entry to record this transaction would be to:
A)a debit to Work-in-Process Inventory for $28,800, a credit to Raw Materials Inventory for $30,000, a debit to Direct Materials Efficiency Variance for $1,200.
B)a debit to Work-in-Process Inventory for $28,800, a credit to Raw Materials Inventory for $50,000, a debit to Direct Materials Efficiency Variance for $28,750.
C)a debit to Work-in-Process Inventory for $30,000, a credit to Raw Materials Inventory for $50,000, a debit to Direct Materials Efficiency Variance for $20,000.
D)a debit to Work-in-Process Inventory for $50,000, a credit to Raw Materials Inventory for $48,000, a credit to Direct Materials Efficiency Variance for $50,000.

Question

Atlace Manufacturers uses standard costing system. Standards for direct materials are as follows:  Actual purchases of materials for the current month are 10,000 pounds for $48,000. Planned and actual production for the month is 3,000 units. Atlace has issued 10,000 pounds of raw materials to production. The journal entry to record this transaction would be to:
A)a debit to Work-in-Process Inventory for $28,800, a credit to Raw Materials Inventory for $30,000, a debit to Direct Materials Efficiency Variance for $1,200. 
B)a debit to Work-in-Process Inventory for $28,800, a credit to Raw Materials Inventory for $50,000, a debit to Direct Materials Efficiency Variance for $28,750. 
C)a debit to Work-in-Process Inventory for $30,000, a credit to Raw Materials Inventory for $50,000, a debit to Direct Materials Efficiency Variance for $20,000. 
D)a debit to Work-in-Process Inventory for $50,000, a credit to Raw Materials Inventory for $48,000, a credit to Direct Materials Efficiency Variance for $50,000.

Quizplus · Accepted Answer

The cost of 10,000 pounds of raw materials at standard cost is $30,000 (10,000 pounds x $3 per pound). Since all 10,000 pounds of raw materials were issued to production, the journal entry would be a debit to Work-in-Process Inventory for $30,000 and a credit to Raw Materials Inventory for $30,000. There is no need to record a Direct Materials Efficiency Variance because there is no information provided to calculate it.

Atlace Manufacturers Uses Standard Costing System