Atoka Manufacturing uses a standard cost system.Standards for direct materials are as follows: $$\begin{array} { | l | r | }
\hline \text { Direct materials (pounds per unit of output) } & 2 \
\hline \text { Cost per pound of direct materials } & \$ 5 \
\hline
\end{array}$$ Actual purchases of direct materials for the current month are 10,000 pounds for $48,000.Planned and actual production for the month is 3000 units.Atoka has issued 10,000 pounds of direct materials to production.The journal entry to record this transaction is ________.
A) a debit to Work-in-Process Inventory for $28,800, a credit to Raw Materials Inventory for $30,000, and a debit to Direct Materials Efficiency Variance for $1200
B) a debit to Work-in-Process Inventory for $28,800, a credit to Raw Materials Inventory for $50,000, and a debit to Direct Materials Efficiency Variance for $21,200
C) a debit to Work-in-Process Inventory for $30,000, a credit to Raw Materials Inventory for $50,000, and 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, and a credit to Direct Materials Efficiency Variance for $2000

Question

Atoka Manufacturing uses a standard cost system.Standards for direct materials are as follows: $$\begin{array} { | l | r | } 
\hline \text { Direct materials (pounds per unit of output) } & 2 \
\hline \text { Cost per pound of direct materials } & \$ 5 \
\hline
\end{array}$$ Actual purchases of direct materials for the current month are 10,000 pounds for $48,000.Planned and actual production for the month is 3000 units.Atoka has issued 10,000 pounds of direct materials to production.The journal entry to record this transaction is ________.
A) a debit to Work-in-Process Inventory for $28,800, a credit to Raw Materials Inventory for $30,000, and a debit to Direct Materials Efficiency Variance for $1200
B) a debit to Work-in-Process Inventory for $28,800, a credit to Raw Materials Inventory for $50,000, and a debit to Direct Materials Efficiency Variance for $21,200
C) a debit to Work-in-Process Inventory for $30,000, a credit to Raw Materials Inventory for $50,000, and 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, and a credit to Direct Materials Efficiency Variance for $2000

Quizplus · Accepted Answer

The journal entry should reflect the actual cost of materials issued to production, which is $50,000 (10,000 pounds x $5 per pound). The debit to Work-in-Process Inventory is for the standard direct materials cost of 3,000 units, which is $30,000 (10,000 pounds x $3 per pound). The credit to Raw Materials Inventory is for the actual cost of materials purchased, which is $50,000. The debit to Direct Materials Efficiency Variance is for the difference between the standard cost of materials and the actual cost of materials used in production, which is $20,000 [(11 - 5) x 10,000].

Atoka Manufacturing Uses a Standard Cost System Actual Purchases of Direct Materials for the Current Month Are