Answer the following questions using the information below:
Hudson Dock Company manufactures boat docks on an assembly line. Its standard costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Finishing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production.
Data for the Assembly Department for May 20X5 are:
Costs for May:

-Which of the following journal entries properly records direct materials requisitions for the work-in-process inventory and direct materials variances, assuming that the Assembly Department used 10% less materials than expected?

Question

Answer the following questions using the information below:
Hudson Dock Company manufactures boat docks on an assembly line. Its standard costing system uses two cost categories, direct materials and conversion costs. Each product must pass through the Assembly Department and the Finishing Department. Direct materials are added at the beginning of the production process. Conversion costs are allocated evenly throughout production.
Data for the Assembly Department for May 20X5 are:
    Costs for May:
  
-Which of the following journal entries properly records direct materials requisitions for the work-in-process inventory and direct materials variances, assuming that the Assembly Department used 10% less materials than expected?

Quizplus · Accepted Answer

Option B records the direct materials requisition with a credit to the raw materials account for the actual cost of materials used, and debits Work-in-Process (WIP) inventory for the standard cost of materials allowed for the production during May. This entry also debits a favorable direct materials variance account for the difference between the actual and standard cost per unit multiplied by the actual quantity of materials used. Since the Assembly Department used 10% less material than expected, the actual quantity of materials used is 90% of the standard quantity of materials allowed. This results in a favorable direct materials variance. Option A is incorrect because it does not account for the materials variance, option C is incorrect because it has a debit to the raw materials account for the standard cost of materials allowed rather than the actual cost of materials used, and option D has a credit to the direct materials variance account, which is incorrect.

Answer the Following Questions Using the Information Below