Exercise 17-22 (Static) Prorating Direct Material Cost Variances (LO 17-1)

In reviewing activity for July, the controller of Mathis, Inc., collected the following data concerning direct materials.

Actual production		103,000	units
Direct materials purchased (actual)	$	1,642,800
Standard cost of materials purchased		1,554,000
Standard direct materials costs per unit produced		14
Standard price times actual amount of materials used		1,405,950

Assume that Mathis Company had no beginning finished goods inventory and only produced one product. Mathis sold 90,640 units during the period.

Required: a. Assume Mathis writes off all variances to Cost of Goods Sold. Prepare the entries Mathis would make to record and close out the variances. b. Assume Mathis prorates all variances to the appropriate accounts. Prepare the entries Mathis would make to record and close out the variances.

Assume that Mathis Company had no beginning finished goods inventory and only produced one product. Mathis sold 90,640 units during the period.

Required: a. Assume Mathis writes off all variances to Cost of Goods Sold. Prepare the entries Mathis would make to record and close out the variances.

• Record the standard cost of materials used and the materials efficiency variance.

Note: My Journal entries are incorrect. Also there is no option for direct labor in connect for the journal entries.

	Event General Journal Debit Credit 1 Cost of goods sold Direct materials price variance Direct materials efficiency variance

Record the cost of the direct materials purchased and the materials price variance.

Note: Enter debits before credits.

	Event General Journal Debit Credit 2 Direct materials price variance Direct materials efficiency variance Cost of goods sold

• Record the closure of direct labor cost variances to Cost of Goods Sold.

Note: Enter debits before credits.

	Event General Journal Debit Credit 3 Work-in-process inventory Cost of goods sold

b. Assume Mathis prorates all variances to the appropriate accounts. Prepare the entries Mathis would make to record and close out the variances.

• Record the standard cost of materials used and the materials efficiency variance.

Note: Enter debits before credits.

	Event General Journal Debit Credit 1 Wages payable Direct materials price variance Cost of goods sold

• Record the cost of the direct materials purchased and the materials price variance.

Note: Enter debits before credits.

	Event General Journal Debit Credit 2 Cost of goods sold Work-in-process inventory Finished goods inventory Direct materials inventory

• Record the closure of direct labor cost variances to Cost of Goods Sold and Finished Goods Inventory.

Note: Enter debits before credits.

	Event General Journal Debit Credit 3 Cost of goods sold Work-in-process inventory Finished goods inventory Direct materials efficiency variance