Question

Hart Company made 3,000 bookshelves using 22,000 board feet of wood costing $266,200. The company's direct materials standards for one bookshelf are 8 board feet of wood at $12 per board foot.

Exercise 23-14A Recording and closing materials variances LO P6

Hart Company uses a standard costing system.

(1) Prepare the journal entry to charge direct materials costs to Work in Process Inventory and record the materials variances.
(2) Assume that Hart’s materials variances are the only variances accumulated in the accounting period and that they are immaterial. Prepare the adjusting journal entry to close the variance accounts at period-end.

Answer 1

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Hart Company	Amount $
Standard material cost of making book shelves
Units produced	3,000.00
Material required per unit	8.00
Total Material required	24,000.00
Cost per feet	12.00
Standard material cost of making book shelves	288,000.00
Actual material cost of making book shelves	266,200.00
Direct Material Variance- Favorable	(21,800.00)

Journal entry
Account	Debit $	Credit $
Work in Process Inventory	288,000.00
Raw Material Inventory		288,000.00
Raw Material Inventory	21,800.00
Cost of goods sold		21,800.00

Note: It is mentioned that the material variance accumulated in the accounting period are immaterial so they will be closed through Cost of goods sold account. If the variances accumulated in the accounting period are material then they will be allocated to Work in Process, Cost of goods sold and Closing Inventory account.