Andrews Corporation purchased 3,000 gallons of raw materials for $9,200.The standard price is $3.00 per gallon.If Andrews records the price variance at the earliest possible time,the entry to record the purchase of the material is:

Question

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The entry should reflect the standard price of $3.00 per gallon, so the Materials account should be debited for 3,000 gallons x $3.00 per gallon = $9,000. However, since the actual price paid was $9,200, there is a material purchase price variance of $200 that needs to be recorded. This variance should be debited to a variance account (Material Purchase Price Variance) and credited to the Accounts Payable account for the actual amount paid ($9,200). Therefore, the entry should be: Materials $9,000; Material Purchase Price Variance $200; Accounts Payable $9,200.

Andrews Corporation Purchased 3,000 Gallons of Raw Materials for $9,200