Question

Use the following information for the Exercises below. [The following information applies to the questions displayed below.] Hart Company made 3,400 bookshelves using 22,400 board feet of wood costing $315,840. The company's direct materials standards for one bookshelf are 8 board feet of wood at $14.00 per board foot. Exercise 23-14A Recording and closing materials variances LO P6 Hart Company uses a standard costing system.
(1) Prepare the journal entry to charge direct materials costs to Work in Process Inventory and record the materials variances.
(2) Assume that Hart's materials variances are the only variances accumulated in the accounting period and that they are immaterial. Prepare the adjusting journal entry to close the variance accounts at period-end.

Answer 1

Answer and Explanation:

The Journal entries is shown below:-

1. Goods in Process Inventory Dr, (3,400 × 8 × $14) $380,800

Direct Materials Price Variance $2,240

$22,400 × ($14.00 - $315,840 ÷ $22,400))

           To Direct Materials Quantity Variance $67,200

$14.00 × ((3,400 × 8) - 22,400)

            To Raw Materials Inventory $315,840

(Being direct material charged is recorded)

2. Direct Materials Quantity Variance   $67,200

         To Direct Materials Price Variance  $2,240

         To Cost of Goods Sold  $64,960

(being the closing is recorded)