During June, Propene Company produced 20,000 chainsaw blades.The standard quantity of material allowed per unit was 2 pounds of steel per blade at a standard cost of $4 per pound.The actual purchase price was $5 per pound.Propene determined that it had a favorable materials usage variance of $2,000 for June.What is the journal entry to record the issuance and usage of materials?

Question

Quizplus · Accepted Answer

Standard quantity of steel = Total number of blades × Material used per unit = 20,000 blades × 2 pounds = 40,000 pounds of steel
 
Materials usage variance = (Actual quantity - Standard quantity) × Standard price
 
 11ea8a4c_4971_bedc_a0e6_ef89395c24d5_TB5550_00 Actual quantity = 39,500 pounds 
 
Work in process = Standard quantity × Standard price = 40,000 × $4 = $160,000
Materials = Actual quantity × Standard price = 39,500 × $4 = $158,000

During June, Propene Company Produced 20,000 Chainsaw Blades