Assume that SQ = Standard Quantity,SP = Standard Price,AQ = Actual Quantity,and AP = Actual Price.The correct entry along with the equation to record the issuance and usage of materials,assuming a favorable materials usage variance,is as follows
A)Work in Process SQ ´ SP Materials Usage Variance (AQ - SQ)SP
Materials AQ ´ SP
B)Work in Process SQ ´ SP Materials Usage Variance (AQ - SQ)SP
Materials AQ ´ SP,
C)Work in Process AQ ´ AP Materials Usage Variance (AQ - SQ)SP
Materials AQ ´ SP.
D)Work in Process AQ ´ AP Materials Usage Variance (AQ - SQ)SP
Materials AQ ´ SP,
E)None of these.

Question

Quizplus · Accepted Answer

The correct entry to record the issuance and usage of materials with a favorable materials usage variance is:
Work in Process = SQ × SP
Materials Usage Variance = (AQ - SQ) × SP
Materials = AQ × SP

Option A is the only option that correctly records both the issuance and usage of materials and the favorable materials usage variance. Option B records the correct issuance and usage of materials but does not include the variance. Option C records an incorrect usage of actual price instead of standard price. Option D records the correct issuance and usage of materials but shows an incorrect usage of actual price instead of standard price in the variance equation.

Assume That SQ = Standard Quantity,SP = Standard Price,AQ =