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Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207

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BuyFindarrow_forward

Financial & Managerial Accounting

14th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337119207
Chapter 22, Problem 22.5BE
Textbook Problem
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Standard cost journal entries

Bellingham Company produced 15,000 units that require 2.5 standard pounds per unit at a $3.75 standard price per pound. The company actually used 36,000 pounds 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 of Solution

Journalize the entry to record the standard direct materials used in production.

Date Accounts and Explanation

Debit

($)

Credit

($)

  Work in process (37,500lb (1)×$3.75) 140,625  
      Direct materials quantity variance (2)   5,625
      Materials    (3)    135,000
  (To record the standard direct materials used in production)    

Table (1)

Working notes:

Standard quantity = No of units required ×Standard pounds per unit= 15,000 units × £2.5=37,500lb (1)

[Direct materials quantity variance

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Chapter 22 Solutions

Financial & Managerial Accounting
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