Brooks Company Uses a Standard Costing System Brooks Company Reports Its Material Price Variances at the Time

question 99

Multiple Choice

Brooks Company uses a standard costing system. The following information pertains to direct materials for the month of June: $\begin{array}{ll}\text { Standard price per lb. } & \$ 15.00 \\\text { Actual purchase price per lb. } & \$ 14.50 \\\text { Quantity purchased } & 3,150 \mathrm{lbs} \\\text { Quantity used } & 2,980 \mathrm{lbs} \\\text { Standard quantity allowed for actual output } & 3,000 \mathrm{lbs} \\\text { Actual output } & 1,000 \text { units }\end{array}$ Brooks Company reports its material price variances at the time of purchase.
What is the journal entry to record material purchases?

• A)Materials 47,250 Materials Price Variance1,575
• Accounts Payable 45,675
• B)Materials 47,165 Materials Price Variance1,490
• Accounts Payable 45,675
• C)Materials 47,175 Materials Price Variance1,500
• Accounts Payable 45,675
• D)Materials 44,100 Materials Price Variance1,575
• Accounts Payable 45,675

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Definitions:

LIFO Method

Last-In, First-Out method; an inventory valuation method where the most recent items added to the inventory are assumed to be the first sold.

Period Of Inflation

A time frame in which the overall level of prices for goods and services is rising, leading to a decrease in purchasing power.

Consigned Inventory

Goods held for sale by one party (the consignee) but owned by another party (the consignor).

Ending Inventory Balance

Ending inventory balance is the total value of all the goods a company has in stock at the end of an accounting period.