Drake Company purchased materials on account.The entry to record the purchase of materials having a standard cost of $1.50 per kilogram from a supplier at $1.60 per kilogram would include which of the following?
A) A credit to Raw Materials Inventory.
B) A debit to Work in Process.
C) A credit to Materials Price Variance.
D) A debit to Materials Price Variance.

Question

Quizplus · Accepted Answer

When materials are purchased at a price different from their standard cost, the Materials Price Variance account is used to record the difference between the two amounts. 
Since the materials were purchased at $1.60 per kilogram, which is $0.10 more than the standard cost of $1.50 per kilogram, a debit entry must be made to the Materials Price Variance account to record the unfavorable variance.

Drake Company Purchased Materials on Account