Question

1.

Dvorak Company produced 2,800 units that require 11 standard pounds per unit at $3.5 standard price per pound. The company actually used 29,600 pounds in production.

Journalize the entry to record the standard direct materials used in production. For a compound transaction, if an amount box does not require an entry, leave it blank.

	Work in Process
	Direct Materials Quantity Variance
	Materials

2.

The following data relate to the direct materials cost for the production of 2,400 automobile tires:

Actual:	49,400 lb. at $1.90
Standard:	50,400 lb. at $1.85

a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Price variance	$
Quantity variance	$
Total direct materials cost variance	$

b. The direct materials price variance should normally be reported to the  . If lower amounts of direct materials had been used because of production efficiencies, the variance would be reported to the  . If the favorable use of raw materials had been caused by the purchase of higher-quality raw materials, the variance should be reported to the  .

Answer 1

Answer:
1)
Account Titles and Explanations	Debit	Credit
Work In Process ( 2,800 Units x 11 pounds x $ 3.50)	$ 107,800
Direct Material Quantity Variance   - Bal. Fig.		$ 4,200
Materials                    ( 29,600 x $ 3.5 )		$ 103,600
(To record the standard direct materials used in production )
2a)
Direct Materials Price Variance             = Actual Quantity x ( Standard price (-) Actual price )              =    49,400 x ( $ 1.85 (-) $ 1.90 )              =    $ 2,470 ( Unfavourable )
Direct Materials Price Variance =    $ 2,470 ( Unfavourable )
Direct Materials Quantity Variance               = Standard Price x ( Standard Quantity (-) Actual Quantity)               =   $ 1.85 x ( 50,400 (-) 49,400 )               =    ($ 1,850)   Favourable
Direct Materials Quantity Variance =       ($ 1,850)   Favourable
Total Direct Materials Cost Variance                  = (Standard Quantity x Standard Price ) (-) (Actual Quantity x Actual price )                  = ( 50,400 x $ 1.85 ) (-) ( 49,400 x $ 1.90)                   =   $ 93,240 (-) $ 93,860                  =   $ 620 ( Unfavourable )
Total Direct Materials Cost Variance =   $ 620 ( Unfavourable )
b)
The direct materials price variance should normally be reported to the Purchasing Department. If lower amounts of direct materials had been used because of production efficiencies, the variance would be reported to the Production supervisor. If the favorable use of raw materials had been caused by the purchase of higher-quality raw materials,the variance should be reported to the Purchasing Department