Question

Steinberg Company had the following direct materials costs for the manufacturing of product T in March: Actual purchase price per pound of direct materials Standard direct materials allowed for units of product T produced Decrease in direct materials inventory Direct materials used in production Standard price per pound of material $ 8.10 2,700 pounds 160 pounds 2,900 pounds $ 7.85 Required: 1. What was Steinberg's direct materials purchase-price variance and its direct materials usage variance for March? Indicate whether each variance was favorable (F) or unfavorable (U). 2. Prepare the appropriate journal entries for March Required: 1. What was Steinberg's direct materials purchase-price variance and its direct materials usage variance for March? Indicate whether each variance was favorable (F) or unfavorable (U). 2. Prepare the appropriate journal entries for March. Complete this question by entering your answers in the tabs below. Required 1 Required 2 What was Steinberg's direct materials purchase-price variance and its direct materials usage variance for March? Indicate whether each variance was favorable (F) or unfavorable (U). (Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.) Direct materials purchase-price variance Direct materials usage variance Required 1 Required 2 >

Answer 1

Answer
Requirement 1
Direct Materials price variance = (Standard price - Actual price) * Material purchased
{$7.85 - $8.1} x 2,700
-0.25 * 2,700
$675 Unfavorable.
Direct Materials usage variance = (Standard quantity - Actual quantity used) * Standard price
{2,700 - 2,900} x $7.85
-$200 * 7.85
$1,570 Unfavorable.
Direct Materials price variance	$675 Unfavorable.
Direct Materials usage variance	$1,570 Unfavorable.

Requirement -2
Journal entries
Particulars	Debit($)	Credit($)
Direct material inventory A/c Dr (2,700*7.85)	$      21,195
Direct material price variance A/c	$           675
To Accounts payable A/c  (2,700*8.10)		$21,870
Finished goods inventory A/c Dr	$      21,195
Direct material usage variance A/c	$        1,570
To Direct material inventory A/c (2,900*7.85)		$22,765