Marciano Manufacturing uses a standard cost system. Standards for direct materials are as follows: Direct materials (pounds per unit of output) 3 Cost per pound of direct materials $3 The company plans to produce 2,500 units and has purchased on account 15,000 pounds of direct materials at a net cost of $42,000. What is the journal entry to record this transaction? A. Raw Materials Inventory 42,000 Direct Materials Cost Variance 3,000 Accounts Payable 39,000 B. Raw Materials Inventory 39,000 Direct Materials Cost Variance 3,000 Accounts Payable 42,000 C. Raw Materials Inventory 42,000 Direct Materials Cost Variance 3,000 Accounts Payable 45,000 D. Raw Materials Inventory 45,000 Direct Materials Cost Variance 3,000 Accounts Payable 42,000
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Direct materials (pounds per unit of output)
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3
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Cost per pound of direct materials
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$3
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Raw Materials Inventory
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42,000
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Direct Materials Cost Variance
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3,000
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Accounts Payable
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39,000
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Raw Materials Inventory
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39,000
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Direct Materials Cost Variance
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3,000
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Accounts Payable
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42,000
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Raw Materials Inventory
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42,000
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Direct Materials Cost Variance
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3,000
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Accounts Payable
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45,000
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Raw Materials Inventory
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45,000
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Direct Materials Cost Variance
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3,000
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Accounts Payable
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42,000
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