Given the following account balances at the end of the first year of operations: $\begin{array}{lr}
\text { Direct materials inventory } & \$ 60,000 \
\text { Work in process inventory } & 200,000 \
\text { Finished goods inventory } & 200,000 \
\text { Cost of goods sold } & 600,000 \
\text { Direct material price variance } & 65,000 \mathrm{~F} \
\text { Direct material efficiency } & 195,000 \mathrm{U}
\end{array}$
Assuming that variances are considered material, the entry and amount of the direct material efficiency variance allocated to work in process inventory is:
A) Credit $39,000
B) Credit $36,792
C) Debit $36,792
D) Debit $39,000

Question

Given the following account balances at the end of the first year of operations: $\begin{array}{lr}
\text { Direct materials inventory } & \$ 60,000 \
\text { Work in process inventory } & 200,000 \
\text { Finished goods inventory } & 200,000 \
\text { Cost of goods sold } & 600,000 \
\text { Direct material price variance } & 65,000 \mathrm{~F} \
\text { Direct material efficiency } & 195,000 \mathrm{U}
\end{array}$ 
Assuming that variances are considered material, the entry and amount of the direct material efficiency variance allocated to work in process inventory is:
A) Credit $39,000
B) Credit $36,792
C) Debit $36,792
D) Debit $39,000

Quizplus · Accepted Answer

The direct material efficiency variance is unfavorable (U) at $195,000, indicating that more materials were used than planned. This variance is allocated to the work in process inventory, increasing its value. Therefore, it is debited to the work in process inventory. The specific amount allocated to work in process inventory is not directly given in the question, but the correct action is a debit to reflect the unfavorable variance.

Given the Following Account Balances at the End of the First