Tip Top Corp. produced 5,100 units that require 14 standard gallons per unit at $9.00 standard price per gallon. The company actually used 75,000 gallons in production.
Journalize the entry to record the standard direct materials used in production.
Standard costing is a costing method that uses set standard costs or rates to the cost of production. The standard costs are set on the basis of past experience and future price estimations.
Answer and Explanation:
Journal entry to record standard direct material cost used in production:
|Date||Account titles & explanations||Amount($)||Amount($)|
|Dec 31, 20XX||Work-in-process inventory||$642,600.00|
|Raw materials inventory||$642,600.00|
|(to record direct material used at standard cost|
In standard costing, the cost of production is recorded at standard cost. At the end, all variances are written off to the cost of goods sold account.
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from Accounting 301: Applied Managerial AccountingChapter 13 / Lesson 5