During June, Propene Company produced 20,000 chainsaw blades. The standard quantity of material allowed per unit...
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?
A.debit Work in Process, 120,000
debit Materials Usage Variance, 2,000
credit Materials, 120,000
b.debit Work in Process, 160,000
credit Materials Usage Variance, 2,000
credit Materials, 158,000
c.debit Work in Process, 130,000
credit Materials Usage Variance, 2,000
credit Materials, 130,000
d.debit Work in Process, 120,500
debit Materials Usage Variance, 2,000
credit Materials, 100,000
Homework Answers
Answer
- Work in process is to be debited by standard cost allowed which
is 20000 units x 2 pounds x $ 4
= $ 160,000 - Material Usage variance is Favourable and hence it will be CREDITED by $ 2000
- Balance is credited to Material account $ 158000 [160000 – 2000]
- Correct Answer = Option ‘B’
debit Work in Process, 160,000
credit Materials Usage Variance, 2,000
credit Materials, 158,000
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