Question

Marciano Manufacturing uses a standard cost system. Standards for direct materials are as​ follows: Direct materials​ (pounds per unit of​ output) 3 Cost per pound of direct materials $ 6 The company plans to produce 2 comma 000 units and has purchased on account 12 comma 000 pounds of direct materials at a net cost of $ 43 comma 800. What is the journal entry to record this​ transaction?

Answer 1

Debit Raw Materials Inventory with $72,000; Credit Direct materials Cost Variance with 28,200, and Credit Accounts Payable with $43,800.

Step-by-step explanation:

Direct materials purchase on account = $43,800

Standard cost of direct materials = 12,000 * $6 = $72,000

Direct materials cost variance = $72,000 - $43,800 = $28,200

The journal entries will therefore be as follows:

Details Dr ($) Cr ($)

Raw Materials Inventory 72,000

Direct materials Cost Variance 28,200

Accounts Payable 43,800

To record direct materials cost and variance.