Malkovich Company uses a standard costing system. The following information pertains to direct materials for the month of July: Standard price per lb. $18.00
Actual purchase price per lb. $16.50
Quantity purchased 3,100 lbs.
Quantity used 2,950 lbs.
Standard quantity allowed for actual output 3,000 lbs.
Actual output 1,000 units
Malkovich Company reports its material price variances at the time of purchase. What is the journal entry to record material purchases?
A) Materials 55,800 Materials Price Variance 4,650
Accounts Payable 51,150
B) Accounts Payable 55,800 Materials 55,800
C) Materials 55,800 Accounts Payable 55,800
D) Materials 51,150 Materials Price Variance 4,650
Accounts Payable 55,800

Question

Quizplus · Accepted Answer

The correct answer is A because the journal entry to record material purchases should include a debit to Materials for the actual cost of the materials purchased, a credit to Accounts Payable for the amount owed to the supplier, and a debit to Materials Price Variance for the difference between the actual cost and the standard cost.

Malkovich Company Uses a Standard Costing System