Hart Company made 7,800 bookshelves using 89,800 board feet of wood costing $565
ID: 2480553 • Letter: H
Question
Hart Company made 7,800 bookshelves using 89,800 board feet of wood costing $565,740. The company’s direct materials standards for one bookshelf are 13 board feet of wood at $6.20 per board foot. Hart Company records standard costs in its accounts and its material variances in separate accounts when it assigns materials costs to the Goods in Process Inventory account. (1) Prepare the journal entry that both charges the direct materials costs to the Goods in Process Inventory account and records the materials variances in their proper accounts.
Explanation / Answer
Actual Cost of Material = Actual Quantity x Actual Price= $565,740
Actual Price= Actual Cost of Material/ Actual Quantity
=565,740/89,800
=$6.3
Standard Quantity= Standard Quantity of Material required for Actual Production
=7,800 x 13=101,400
Standard Material Cost = Standard Quantity x Standard Price
=101,400 x 6.2
=$628,680
Material Price Variance=( Standard Price- Actual Price ) x Actual Quantity
=(6.2-6.3) x 89,800
=- $8,980 U
Material Usage(Qty) Variance= (Standard Qty – Actual Qty) x Standard Price
=(101,400-89,800 ) x 6.2
=$71,920 F
Journal Entry
Dr Goods in Process inventory $628,680
Dr Direct Material Price Variance $8,980
Cr Direct Material Usage Variance $71,920
Cr Raw Material Inventory $565,740
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