During June, Cisco Company produced 15,000 chainsaw blades. The standard quantit

Question

During June, Cisco Company produced 15,000 chainsaw blades. The standard quantity of material allowed per unit was 1.5 pounds of steel per blade at a standard cost of $5 per pound. The actual purchase price was $6.25 per pound. Cisco determined that it had a favorable materials usage variance of $2,500 for June. What is the journal entry to record the issuance and usage of materials? a. Work in Process 112,500 Materials Usage Variance 2,500 Materials 110,000 b. Work in Process 110,000 Materials Usage Variance 2,500 Materials 112,000 c. Work in Process 112,500 Materials Usage Variance 2,500 Materials 115,000 d. Work in Process 140,625 Materials Usage Variance 2,500 Materials 138,125

Explanation / Answer

Journal entry:

a:

material usage variance = std price(actual qty - std qty)

2500 = 5(AQ-22500)

AQ = (112500+2500)/5

AQ = 23000

for issuance = Production dept A/c Dr. 143750 (23000*6.25)

To inventory A/c 143750

for usage = WIP A/c Dr. 112500

finished good A.c DR 31250

To Production Dept A/c 143750

b.

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.