Marciano Manufacturing uses a standard cost system. Standards for direct materia
ID: 2508879 • Letter: M
Question
Marciano Manufacturing uses a standard cost system. Standards for direct materials are as follows Direct materials (pounds per unit of output $6 Cost per pound of direct materials The company plans to produce 2.500 units and has purchased on account 12,000 pounds of direct materials at a net cost of $43,800 What is the journal entry to record this transaction? O A. Raw Materials Inventory 43,800 28,200 Direct Materials Cost Variance 72,000 Accounts Payable Raw Materials Inventory Direct Materials Cost Variance 15,600 28,200 OB. 43,800 Accounts Payable Raw Materials Inventory 72,000 O C. 28 200 43.800 Direct Materials Cost Variance Accounts Payable O D. Raw Materials Inventory 43,800 Direct Materials Cost Variance Accounts Payable 28.200 5.600 to seiect your answer 8Explanation / Answer
Answer is C. Raw material Inventory Dr. $72,000
Direct material cost variance $28,200
Accounts payable $43800
Explanation:
At the time of purchase, the material price variance is computed only as follows:
Std price: $6 per unit
Actual Quantity purchased: 12000 units
Std cost of Actual quantity purchased: 12000 units @ 6 = $72000
Actual material cost: $43,800
MAterial Price variance= Std cost of actual material purchased - Actual material cost
= 72000 -43800 = 28200 F (as the Price variance is favorable it shall be credited to Direct material cost variance)