The Dexon Company makes and sells a single product called a Mip and employs a st

Question

The Dexon Company makes and sells a single product called a Mip and employs a standard costing system. The following standards have been established for one unit of Mip:

Standard Quantity
or Hours Standard Cost
per Mip
Direct materials 6 board feet $9.00
Direct labor 0.8 hours $9.60
There were no inventories of any kind on August 1. During August, the following events occurred:

Purchased 15,000 board feet at the total cost of $24,000.
Used 12,000 board feet to produce 2,100 Mips.
Used 1,700 hours of direct labor time at a total cost of $20,060.

To record the purchase of direct materials, the general ledger would include what entry to the Materials Price Variance Account?

a $1,500 credit
b $1,500 debit
c $6,000 credit
d $6,000 debit

Explanation / Answer

first we nneed to find the what would be the amount if 15000 fts were used in direct material. To do so take 15000 /6 * $9 = 22500 The original price is $ 24000 which means that there is $ 1500 credit. so the answer is : A ..

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