Chapter 22, Problem 22.5APE

### Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
ISBN: 9781285866307

Chapter
Section

### Financial & Managerial Accounting

13th Edition
Carl Warren + 2 others
ISBN: 9781285866307
Textbook Problem

# Standard cost journal entriesLo-bed Company produced 4,000 units that require two standard gallons per unit at $20.00 standard price per gallon. The company actually used 8,200 gallons in production. Journalize the entry to record the standard direct materials used in production. To determine Standard cost: In the accounting records, the term standard cost refers to the practice of replacement of an expected cost for an actual cost. Then the difference between the expected costs, and actual costs showing the variance are also recorded periodically. A standard costs is also known as target cost or predetermined cost. To journalize: The entry to record the standard direct materials used in production. Explanation Journalize the entry to record the standard direct materials used in production.  Date Accounts and Explanation Debit ($) Credit ($) Â Work in process (8,000â€‰galÂ (1)Ã—$20.00) 160,000 Â Â Â Â Â Â  Direct materials quantity variance (2) 4,000 Â Â Â Â Â Â  MaterialsÂ Â Â  (3)Â Â 164,000 Â (Received cash dividend) Â Â

Table (1)

Working notes:

StandardÂ quantityÂ =Â NoÂ ofÂ unitsÂ requiredÂ Ã—StandardÂ gal.Â perÂ unit=Â 4,000Â unitsÂ Ã—Â 2â€‰=8,000â€‰gal

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