Lakatos Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs. There is no variable manufacturing overhead. The standard cost card for the company's only product contains the following information concerning direct materials:InputsStandard Quantityor HoursStandard Price or RateStandard CostDirect materials3.7kilos$9.00per kilo$33.30During the year, the company completed the following transactions concerning direct materials:a.Purchased 151,800 kilos of raw material at a price of $9.70 per kilo.b.Used 140,870 kilos of the raw material to produce 38,100 units of work in process.The company calculated the following direct materials
variances for the year:Materials price variance$106,260UMaterials quantity variance$900FAssume that all transactions are recorded on the below worksheet, which is similar to the worksheet shown in your text except that it has been divided into two parts so that it fits on one page. The beginning balances in each of the accounts have been given. PP&E (net) stands for Property, Plant, and Equipment net of depreciation.?CashRaw MaterialsWork in ProcessFinished GoodsPP&E (net)=Materials Price VarianceMaterials Quantity Variance1/1$1,130,000$59,940$0$81,510$432,900=$0$0a.?????=??b.?????=???Labor Rate VarianceLabor Efficiency VarianceFOH Budget VarianceFOH Volume VarianceRetained Earnings1/1$0$0$0$0$1,704,350a.?????b.?????When the purchase of raw materials is recorded in transaction (a) above, which of the following entries will be made?
A. $106,260 in the Materials Quantity Variance column
B. ($106,260) in the Materials Price Variance column
C. ($106,260) in the Materials Quantity Variance column
D. $106,260 in the Materials Price Variance column
Answer: B
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