In a standard cost bookkeeping system, when the actual material price exceeds th
ID: 2499464 • Letter: I
Question
In a standard cost bookkeeping system, when the actual material price exceeds the standard price, the double entry to record the difference in price is:
A. Debit the material price variance account and credit the raw material control account
B. Credit the material price variance account and debit the raw material control account
C. Debit the material price variance account and credit the work-in-progress account
D. Credit the material price variance account and debit the work-in-progress account
Explanation / Answer
Answer: Option - A. Debit the material price variance account and credit the raw material control account
Material price variances are recorded in Direct material price variance account. The account is debited with adverse variance but credited with favorable variance when arise. The corresponding credit is made to raw material control account because the materials are yet form part of work in process inventory.