Landlubber Company established a standard direct materials cost of 1.5 gallons a
ID: 2488307 • Letter: L
Question
Landlubber Company established a standard direct materials cost of 1.5 gallons at $2 per gallon for one unit of its product. During the past month, actual production was 6,500 units. The material quantity variance was $700 favorable and the material price variance was $470 unfavorable. The entry to charge Goods in Process Inventory for the standard material costs during the month and to record the direct material variances in the accounts would include:
A debit to Direct Material Quantity Variance for $700.
A credit to Goods in Process for $19,270.
A credit to Goods in Process for $19,500.
A debit to Raw Materials for $19,500.
A debit to Direct Material Price Variance for $470.
Explanation / Answer
A credit to Goods in Process for $19,270.
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