If the standard quantity of materials is 84,500 units @ $0.15 per unit and the actual quantity is 95,000 units @ $0.12 per unit,then the journal entry to record the cost of materials used includes:
A)A debit to Work in Process Inventory of $11,400.
B)A debit to Work in Process Inventory of $12,675.
C)A debit to Materials Price variance of $2,850.
D)A credit to Materials Price variance of $1,575.

Question

Quizplus · Accepted Answer

The formula for finding the total cost of materials used is:
Actual Quantity x Actual Price = Total Cost of Materials Used
Therefore, the total cost of materials used in this case would be:
95,000 x $0.12 = $11,400
To record the cost of materials used, we need to credit the Materials Inventory account for the standard quantity of materials and debit the Work in Process Inventory account for the actual quantity of materials used at the actual price. The difference between the standard price and the actual price will be recorded as a Materials Price Variance.
The journal entry to record the cost of materials used in this case would be:
Debit Work in Process Inventory $11,400
Credit Materials Inventory $12,675
Debit Materials Price Variance $1,275
Therefore, the correct answer is B, which reflects the debit to Work in Process Inventory of $11,400.

If the Standard Quantity of Materials Is 84,500 Units @