Atlace Manufacturing uses a standard cost system.Standards for direct materials are as follows:

The company plans to produce 3,000 units and has purchased 15,000 pounds of direct materials at a net cost of $42,600.What is the journal entry to record this transaction?

Question

Atlace Manufacturing uses a standard cost system.Standards for direct materials are as follows:

The company plans to produce 3,000 units and has purchased 15,000 pounds of direct materials at a net cost of $42,600.What is the journal entry to record this transaction?

Quizplus · Accepted Answer

The journal entry to record the purchase of direct materials is:
Debit Raw Materials Inventory for the standard cost of materials purchased:
(15,000 pounds x $14 standard cost per pound) = $210,000
Credit Accounts Payable for the net cost of materials purchased: $42,600
Therefore, the correct journal entry is:
Debit Raw Materials Inventory $210,000
Credit Accounts Payable $42,600

Atlace Manufacturing Uses a Standard Cost System