Atlace Manufacturers uses a 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 ________.

Question

Atlace Manufacturers uses a 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 ________.

Quizplus · Accepted Answer

The standard cost for direct materials is not given, so we cannot calculate any variances. The cost of actual purchases of materials is $48,000 for 10,000 pounds or $4.80 per pound. The total amount of materials issued to production is 10,000 pounds, which is worth $48,000 or $4.80 per pound. The journal entry to record this transaction would be a debit to Work-in-Process Inventory for $30,000 ($4.80 per pound x 3,000 units x 6 pounds per unit), a credit to Raw Materials Inventory for $50,000 or 10,000 pounds x $5.00 per pound (standard cost per pound), and a debit to Direct Materials Efficiency Variance for $20,000 or the difference between the actual cost and the standard cost ($5.00 per pound - $4.80 per pound) times the actual quantity used (10,000 pounds).

Atlace Manufacturers Uses a Standard Costing System