Cybernet ?Systems\'s static budget predicted production of and sales of 95 conne

Question

Cybernet ?Systems's static budget predicted production of and sales of 95 connectors in? August, but the company actually produced and sold only 50 connectors. Direct materials were budgeted at $91 per connector. The company purchased and used direct materials that cost $6,446.

What is the journal entry for the direct materials? purchased?

A.

Date

Accounts and Explanation

Debit

Credit

Work-in-Process Inventory

4,550

Direct Materials Cost Variance

1,896

Raw Materials Inventory

6,446

B.

Date

Accounts and Explanation

Debit

Credit

Raw Materials Inventory

4,550

Direct Materials Efficiency Variance

1,896

Accounts Payable

6,446

C.

Date

Accounts and Explanation

Debit

Credit

Raw Materials Inventory

4,550

Direct Materials Cost Variance

1,896

Accounts Payable

6,446

D.

Date

Accounts and Explanation

Debit

Credit

Work-in-Process Inventory

4,550

Direct Materials Efficiency Variance

1,896

Raw Materials Inventory

6,446

Date

Accounts and Explanation

Debit

Credit

Work-in-Process Inventory

4,550

Direct Materials Cost Variance

1,896

Raw Materials Inventory

6,446

Explanation / Answer

Option C is the answer

Raw material inventory - debited (asset) . Cost variance = 6446 - (50x91) = 1896 debited. Accounts payable of 6446 must be credited - current liabily increase

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