Quality Cabinet Company uses a standard costing system and produced 2,020 cabine
ID: 2473224 • Letter: Q
Question
Quality Cabinet Company uses a standard costing system and produced 2,020 cabinets during May. The standard cost of wood is $23 per linear foot, and the standard quantity for each cabinet is 25 linear feet. During May, the company purchased 53,700 linear feet of wood for $1,127,700, and 51,800 feet were used in production. The company purchases all materials on account.
No.
Account Titles and Explanation
Debit
Credit
1.
(To record material purchases)
2.
(To record material used in production)
Quality Cabinet Company uses a standard costing system and produced 2,020 cabinets during May. The standard cost of wood is $23 per linear foot, and the standard quantity for each cabinet is 25 linear feet. During May, the company purchased 53,700 linear feet of wood for $1,127,700, and 51,800 feet were used in production. The company purchases all materials on account.
Explanation / Answer
Solution:
Material Price Variance = Actual Quantity Purchased (Standard Price – Actual Price)
= (53,700 x $23) - $1,127,700
= $1,235,100 - $1,127,700
= $107,400 Favorable
Material Quantity Variance = Standard Price (Standard Quantity for Actual Production – Actual Quantity Used)
Standard Quantity for Actual Production = Actual Production Unit x Standard Quantity per unit = 2,020 x 25 = 50,500 feet
= $23 (50,500 – 51,800)
= $29,900 Unfavorable
No.
Account Titles and Explanation
Debit
Credit
1
Direct Materials Dr.
$1,235,100
To Accounts Payable
$1,127,700
To Direct Material Price Variance
$107,400
(To record material purchases)
2
Work In Process Dr. (50,500 x 23)
$1,161,500
Direct Material Quantity Variance Dr.
$29,900
To Direct Material (51,800 x 23)
$1,191,400
(To record material used in production)
No.
Account Titles and Explanation
Debit
Credit
1
Direct Materials Dr.
$1,235,100
To Accounts Payable
$1,127,700
To Direct Material Price Variance
$107,400
(To record material purchases)
2
Work In Process Dr. (50,500 x 23)
$1,161,500
Direct Material Quantity Variance Dr.
$29,900
To Direct Material (51,800 x 23)
$1,191,400
(To record material used in production)