Malloy Corporation has provided the following data concerning its most important raw material, compound I51D: Standard cost$30.50 per literStandard quantity 4.6 liters per unit of outputCost of material purchased in October$30.70 per literMaterial purchased in October 4,000 litersMaterial used in production in October 3,580 litersActual output in October 800 unitsThe raw material was purchased on account.Required:a. Record the purchase of the raw material at standard cost in a journal entry.b. Record the use of the raw material in production in a journal entry.
What will be an ideal response?
A. Entry to record purchase of materials at standard cost:
| Materials Inventory ($30.50 × 4,000 liters) | 122,000 | |
| Material Price Variance (4,000 liters × ($30.70 ? $30.50)) | 800 | |
| Accounts Payable ($30.70 × 4,000 liters) | 122,800 |
| Work-in-Process Inventory ($30.50 × 3,680 liters*) | 112,240 | |
| Material Efficiency Variance ($30.50 × [3,580 liters ? 3,680 liters*]) | 3,050 | |
| Materials Inventory ($30.50 × 3,580 liters) | 109,190 | |
| *800 units × 4.6 liters = 3,680. | ||
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