Agus, Inc. uses standard costing for the accounting for its product. The budget officer provided the following standard data imposed by the top-level management concerning direct materials: Standard direct material is 3 per unit of the product Standard price is P5.00 per unit of direct material During the year, the company acquired on account 1,000 units of direct material at a total cost of P4,000. It also manufactured 150 products costing 750 direct materials. The journal entry to record the material usage variance will include a Group of answer choices a. Credit to Material Usage Variance at P1,200 b. Debit to Material Usage Variance at P1,500 c. Credit to Raw Materials at P3,000 d. Debit to Work in Process at P1,800
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Agus, Inc. uses
- Standard direct material is 3 per unit of the product
- Standard price is P5.00 per unit of direct material
During the year, the company acquired on account 1,000 units of direct material at a total cost of P4,000. It also manufactured 150 products costing 750 direct materials.
The
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