Question

Information on Bowgie Chemicals direct materials costs follows.

Actual quantities of direct materials used		31,900
Actual costs of direct materials used	$	146,600
Standard price per unit of direct materials	$	4.39
Flexible budget for direct materials	$	123,500

Bowgie Chemicals has no materials inventories.

Required:
a. Prepare a short report for management showing Bowgie Chemicals’s direct materials price and efficiency variances.
b. (Appendix) Prepare the journal entries to record the purchase and use of the direct materials using standard costing.

Answer 1

Solutions Given data, Actual quantities of direct materials used 31900 Actual costs of direct material used 146 too Standard price per hit of direct materials 4. 39 flexible budget for direct materials. 123SOU Acital price of material = 146600 31900 $4.59 Standard quantity of material = 123500 439 28133 Material price per variance .. material quantity rasiance - (4+39-4-59) 31900 3 $6360. U & (28133_31900)x4.39 = 16537.13 - 16538

Material price raskince and material quantity variance both reflects hefficiency of purchase and production department. Due to inefficiency of both departments to heal material vanance is unfavorable by $ 22918. (b) Event particulars Debit I credit cas TT Direct material inventory (31900 24.39) $140oul Direet material price variance $ 6380 TO Accounts payable (31900* 4-59) ३.146421 by works in process inventor 4123504 (28133 X4:39) Direct maternal quantity variance $16538 Bidirect matessil invention (31900 14:34) $ 14000)