Question

Steinberg Company had the following direct material costs for the manufacturing of product T in march:

Actual purchase price per pound of direct materials........................................................................................$ 8.90

Standard direct materials allowed for units of product T produced...................................................................3500 pounds

Decrease in direct materials inventory.................................................................................................................240 pounds

Direct materials used in production...................................................................................................................3700 pounds

Standard price per pound of material................................................................................................................$ 8.65

1. What was Steinbergs direct materials purchase-price variance and its direct materials usage variance for March. Indicate whether each variance was F(favorable) or U(unfavorable).

2. Prepare the appropriate journal entries for March.

Answer 1

Purchase Ppirest Malevels Purchase Price Variance Glandard Price - Actual price) x Achoal quantity = ($8.65 -48.90) x 3460 Pounds* =-0.25 *3460 pounds =>#865 Cur favourable) * Achual quanliby purchased: Direct Material Decrease Used Inventory - 3700 - 240 pounds - 3460 pounds. Direct Materials Usage Valance. Standard quantity - Achoal quantify J x standard Price = (3500 - 3700) * $ 8.65 = -200 x$8.65 = 1730 Confavourable) 2) Journal Enteles! Date L particulars bebit Credit Direct Material Inventory / 29,929 Material price varen 26531 865 Accounts Payable 30,794 (3460 X$8.90) (to record the cost of Purchases during the month] Inventory finished Goods (3560 * 8.65) Direct Haleval Usage. Vouance 1730 ...brrect Material Inventory (3700 X.8.65) [To record the standard direct Material Cost of production / for this period ] 30275 32,005