Seafarer Company established a standard direct materials cost of 1.5 gallons at $2 per gallon for one unit of its product. During the past month, actual production was 6,500 units. The material quantity variance was $700 favorable and the material price variance 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 of the following except:

Question

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The entry would include:

- A debit to Work in Process Inventory for the standard direct materials cost: 6,500 units x 1.5 gallons x $2/gallon = $19,500
- A credit to Raw Materials for the actual cost of materials purchased (not specified in the problem)
- A credit to Direct Material Quantity Variance for the favorable variance: $700
- A debit to Direct Material Price Variance for the unfavorable variance: $470

However, there would be no debit to Cost of Goods Sold at this point, as the actual cost of materials used (which includes the variances) would be allocated to Work in Process Inventory and then transferred to Finished Goods Inventory and eventually to Cost of Goods Sold when the units are sold.

Seafarer Company Established a Standard Direct Materials Cost of 1