During the week, the SpartanSpartan Restaurant Group\'s French fry manufacturing

Question

During the week, the SpartanSpartan Restaurant Group's French fry manufacturing facility purchased 10 comma 20010,200 pounds of potatoes at a price of $ 1.06$1.06 per pound. The standard price per pound is $ 1.02$1.02. During the week, 9 comma 1509,150 pounds of potatoes were used. The standard quantity of potatoes that should have been used for the actual volume of output was 9 comma 0009,000 pounds. Requirements 1. Record the following transactions using a standard cost accounting system: a. The purchase of potatoes b. The use of potatoes 2. Are the variances favorable or unfavorable? Explain.

Explanation / Answer

Ans.1 No. Accounts titles & explanation Debit Credit 1 Raw material inventory (10200 * 1.02) 10404 Direct material price variance [(1.02 - 1.06)*10200] 408 Accounts Payable 10812 2 Work in process inventory (9000 * 1.02) 9180 Direct material efficiency variance [(9000-9150)*1.02] 153 Raw material inventory 9333 * Direct Materials Price Variance & Direct Materials Efficiency Variance both are unfavourable, because the actual price and actual quantiry is higher than standard price and standard quantity.

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