Use the information below to answer the following question(s).Reynolds Dock Company manufactures boat docks on an assembly line.Its standard costing system utilizes 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 October 2019 are:

-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 percent less materials than expected?

Question

Use the information below to answer the following question(s).Reynolds Dock Company manufactures boat docks on an assembly line.Its standard costing system utilizes 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 October 2019 are:
 
-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 percent less materials than expected?

Quizplus · Accepted Answer

The correct journal entry would be to credit Raw Materials Inventory for the standard cost of materials used, and debit Work-in-Process Inventory for the actual cost of materials used. The debit to Work-in-Process should also include the total direct materials variance, which is calculated as the difference between the actual cost of materials used and the standard cost of materials allowed based on the actual production. Since the Assembly department used 10% less materials than expected, the variance would be favorable, and should be credited to the Materials Price Variance account. Choice B correctly records this journal entry.

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