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DM variances; journal entries Skip Company produces a product called Lem. The standard direct material cost to produce one unit of Lem is four quarts of raw material at $2.50 per quart. During May, 4,200 quarts of raw material were purchased at a cost of $10,080. All the purchased material was used to produce 1,000 units of Lem. a. Compute the material price variance and material quantity variance for May. Note: Do not use a negative sign with your answers. Material price variance $ Material quantity variance $ 420 Favorable 0x Unfavorable b. Assume the same facts except that Skip Company purchased 6,000 quarts of material at the previously calculated cost per quart, but used only 4,200 quarts. Compute the material price variance and material quantity variance for May, assuming that Skip identifies variances at the earliest possible time. Note: Do not use a negative sign with your answers. Material price variance $ 0x Favorable 500 Unfavorable Material quantity variance $ c. Prepare the journal entries to record the material price and usage variances calculated in (b). Note: List any multiple debits or any multiple credits in alphabetical order by account name. Account Raw Material Inventory Accounts Payable Debit Credit 0 x 0✓ 0x Material Price Variance 0✓ To record material price variance Material Quantity Variance 500- Work in Process Inventory 10000✓ Raw Material Inventory 0✓ 10500 To record material quantity variance

DM variances; journal entries Skip Company produces a product called Lem. The standard direct material cost to produce one unit of Lem is four quarts of raw material at $2.50 per quart. During May, 4,200 quarts of raw material were purchased at a cost of $10,080. All the purchased material was used to produce 1,000 units of Lem. a. Compute the material price variance and material quantity variance for May. Note: Do not use a negative sign with your answers. Material price variance $ Material quantity variance $ 420 Favorable 0x Unfavorable b. Assume the same facts except that Skip Company purchased 6,000 quarts of material at the previously calculated cost per quart, but used only 4,200 quarts. Compute the material price variance and material quantity variance for May, assuming that Skip identifies variances at the earliest possible time. Note: Do not use a negative sign with your answers. Material price variance $ 0x Favorable 500 Unfavorable Material quantity variance $ c. Prepare the journal entries to record the material price and usage variances calculated in (b). Note: List any multiple debits or any multiple credits in alphabetical order by account name. Account Raw Material Inventory Accounts Payable Debit Credit 0 x 0✓ 0x Material Price Variance 0✓ To record material price variance Material Quantity Variance 500- Work in Process Inventory 10000✓ Raw Material Inventory 0✓ 10500 To record material quantity variance

Principles of Accounting Volume 2
Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter8: Standard Costs And Variances
Section: Chapter Questions
Problem 5PA: Ed Co. manufactures two types of O rings, large and small. Both rings use the same material but...
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DM variances; journal entries Skip Company produces a product called Lem. The standard direct material cost to produce one unit of Lem is four quarts of raw material at $2.50 per quart. During May, 4,200 quarts of raw material were purchased at a cost of $10,080. All the purchased material was used to produce 1,000 units of Lem. a. Compute the material price variance and material quantity variance for May. Note: Do not use a negative sign with your answers. $ Material price variance Material quantity variance $ 420 Favorable 0 × Unfavorable b. Assume the same facts except that Skip Company purchased 6,000 quarts of material at the previously calculated cost per quart, but used only 4,200 quarts. Compute the material price variance and material quantity variance for May, assuming that Skip identifies variances at the earliest possible time. Note: Do not use a negative sign with your answers. $ 0 Favorable 500 Unfavorable Material price variance Material quantity variance $ c. Prepare the journal entries to record the material price and usage variances calculated in (b). Note: List any multiple debits or any multiple credits in alphabetical order by account name. Account Debit Credit Raw Material Inventory ÷ 0 × 0 Accounts Payable Material Price Variance 0 × 0 ✓ × To record material price variance Material Quantity Variance Work in Process Inventory Raw Material Inventory ÷ 500 0 ✓ 10000 0 0 ✓ 10500 To record material quantity variance
Transcribed Image Text:DM variances; journal entries Skip Company produces a product called Lem. The standard direct material cost to produce one unit of Lem is four quarts of raw material at $2.50 per quart. During May, 4,200 quarts of raw material were purchased at a cost of $10,080. All the purchased material was used to produce 1,000 units of Lem. a. Compute the material price variance and material quantity variance for May. Note: Do not use a negative sign with your answers. $ Material price variance Material quantity variance $ 420 Favorable 0 × Unfavorable b. Assume the same facts except that Skip Company purchased 6,000 quarts of material at the previously calculated cost per quart, but used only 4,200 quarts. Compute the material price variance and material quantity variance for May, assuming that Skip identifies variances at the earliest possible time. Note: Do not use a negative sign with your answers. $ 0 Favorable 500 Unfavorable Material price variance Material quantity variance $ c. Prepare the journal entries to record the material price and usage variances calculated in (b). Note: List any multiple debits or any multiple credits in alphabetical order by account name. Account Debit Credit Raw Material Inventory ÷ 0 × 0 Accounts Payable Material Price Variance 0 × 0 ✓ × To record material price variance Material Quantity Variance Work in Process Inventory Raw Material Inventory ÷ 500 0 ✓ 10000 0 0 ✓ 10500 To record material quantity variance
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