This Quiz: 20 pts po This Question: 2 pts9 of 9 (0 complete) JavaPro Systems\'s

Question

This Quiz: 20 pts po This Question: 2 pts9 of 9 (0 complete) JavaPro Systems's static budget predicted production of and sales of 55 connectors in August, but the company actually produced and sold only 50 connectors. Direct materials were budgeted at $90 per connector. The company purchased and used direct materials that cost $6,738. What is the journal entry for the direct materials purchased? O ADate Credit Debit Accounts and Explanation 4,500 Work-in-Process Inventory Direct Materials Efficiency Variance 2,238 Raw Materials Inventory 6,738 OB. Date Credit Accounts and Explanation Debit Raw Materials Inventory Direct Materials Cost Variance 4,500 2,238 Accounts Payable 6,738 OC. Date Accounts and Explanation Debit Credit Raw Materials Inventory Direct Materials Efficiency Variance 4.500 2.238 Accounts Payable 6,738 OD. Date Accounts and Explanation Debit Credit Work-in-Process Inventory Direct Materials Cost Variance 4.500 2.238 Raw Materials Inventory 6,738

Explanation / Answer

The correct answer is

B. Raw Materials Inventory 4500

Direct Material Cost Variance 2238

Accounts Payable                            6738

Since, the journal entry is being passed for raw material procurement and hence raw material will be debited and variance on purchase is referred as cost or price variance, while the vcariance on utilisation is termed as efficiency variance

Raw Material is debited by the standard cost i.e. 50*90 = 4500

The difference being variance

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