What is the correct journal entry to record a favorable materials mix variance a

Question

What is the correct journal entry to record a favorable materials mix variance assuming all material variances are recognized when the direct materials are issued to production? Work in Process Inventory Direct Materials Mix Variance xXX Direct material inventory Work in Process Inventory Direct Materials Mix Variance Direct material inventory Finished Goods Inventory Direct Materials Mix Variance xXX Work in Process Inventory xxX 0 | Finished Goods Inventory Direct Materials Mix Variance xXX Work in Process Inventory

Explanation / Answer

YOU HAVE CHOSEN THE CORRECT ANSWER:

ENTY WOULD BE

EXPLANATION:FOR THE VALUE OF DIRECT MATERIAL USED AND FAVOURABLE MIX VARIANCE THEREON IDENTIFIED AND RECORDED AT THE TIME OF ISSUE OF MATERIAL

SIMPLE LOGIC:YOU CAN UNDERSTAND IT LIKE

a)YOU ISSUE DIRECT MATERIAL , NOW YOUR DIRECT MATERIAL DECREASES THEREFORE BEING AN ASSET , WHEN AN ASSET IS REDUCED IT IS CREDITED

b)You start production , your WIP increases sam logic it is an asset and when an asset is increased , it is debited

c)your favourable material mix variance , think of it as an profit , now all the pofits are credited (logic:cedit all income and gains , debit any losses)

WORK IN PROCESS INVENTORY XXX DIRECT MATERIAL MIX MARIANCE XXX DIRECT MATERIAL INVENTORY XXX

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