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Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094

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BuyFindarrow_forward

Accounting

27th Edition
WARREN + 5 others
ISBN: 9781337272094
Textbook Problem

Recording standards in accounts

 Cioffi Manufacturing Company incorporates standards in its accounts and identifies variances at the time the manufacturing costs are incurred. Journalize the entries to record the following transactions:

 a.    Purchased 2,450 units of copper tubing on account at $52.00 per unit. The standard price is $48.50 per unit.

 b.    Used 1,900 units of copper tubing in the process of manufacturing 200 air conditioners. Ten units of copper tubing are required, at standard, to produce one air conditioner.

a.

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 entries to record the following transactions.

Explanation

Journalize the entry to record the purchase of standard direct materials.

DateAccounts and Explanation

Debit

($)

Credit

($)

 Materials    (1)118,825 
      Direct materials price variance (2)8,575 
      Accounts payable    (3)  127,400
 (To record the purchase of standard direct materials)  

Table (1)

Working notes:

Calculate the materials.

Materials=(Actual quantity×Standard price per unit)=(2,450units×$48.50)=$118,825 (1)

Calculate the direct materials price variance

b.

To determine

To journalize: the entry to record the standard direct materials used in production.

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