Question

Required information Journal Entries under Standard Costing (Appendix), Posting Journal Entries for Variances (Appendix) (LO 10-6, 10-9) [The following information applies to the questions displayed below.) Saskatewan Can Company manufactures recyclable soft-drink cans. A unit of production is a case of 12 dozen cans. The following standards have been set by the production-engineering staff and the controller. Direct Labor: Quantity, 0.25 hour Rate, $16 per hour Direct Material: Quantity, 4 kilograms Price, $0.80 per kilogram Actual material purchases amounted to 240,000 kilograms at $.81 per kilogram. Actual costs incurred in the production of 50,000 units were as follows: Direct labor: Direct material: $211,900 for 13,000 hours $170, 100 for 210,000 kilograms Exercise 10-31 Required: Prepare the following journal entries. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Do not round intermediate calculations.)

Answer 1

Material Purchase Price Variance = (Standard Price per Kilogram - Actual Price price kilogram) * Actual Quantity

= ($0.80 per kilogram - $0.81 per kilogram) * 240,000 kilograms

= -$0.01 per kilogram* 240,000 kilograms

= -$2,400 Unfavorable

Journal Entry to record the purchase of direct materials on account and material purchase price variance:

Transaction	General Journal	Debit	Credit
1	Merchandise Inventory (240,000 kilos * $0.80 per kilo)	$192,000
	Direct Materials Price Variance (as calculated)	$2,400
	Accounts Payable (240,000 kilograms * $0.81 per kilogram)		$194,400
	(To record the purchase of merchandise inventory on account)