Cox Company\'s direct material cost information for May is as follows: Actual qu
ID: 2476255 • Letter: C
Question
Cox Company's direct material cost information for May is as follows:
Actual quantity purchased ............... 18,000
Actual unit purchase price................ 3.60
Standard unit purchase price............. 3.40
Standard quantity allowed for actual production 16,000
Actual quantity used....................... 15,000
Direct material price variance............ 3,600
Direct material efficiency variance........ 3,400
1) Prepare the journal entry to record the purchase of direct materials
2) Prepare the journal entry to record the usage of direct material
Explanation / Answer
1. JOURNAL ENTRY TO RECORD THE PURCHASE OF DIRECT MATERIAL:
Direct Material A/C Dr. 61200
(18000*3.40)
Direct material price variance A/C Dr. 3600
(18000*0.20)
To Cash A/C 64800
(18000*3.60)
(Being direct material purchased)
2. JOURNAL ENTRY TO RECORD THE USAGE OF DIRECT MATERIAL:
Work in progressA/C Dr. 51000
(15000*3.40)
Material efficiency variance Dr. 3400
(1000*3.40)
To Direct material A/c 54400
(16000*3.40)
( Being direct material issued to store for process)