Balt Company Maintains a Standard Cost System; as Such, All

question 68

Essay

Balt Company maintains a standard cost system; as such, all inventories, including materials, are carried on the books at standard cost. Last period, Balt used 5,000 pounds of Material H to produce 800 units of Product C8. The company has established a standard of 7 pounds of Material H per unit of C8, at a price of $7.50 per pound of material. During the period the inventory for Material H decreased by 2,000 pounds. The company spent $25,000 during the period to purchase material H.

Required:
1. Calculate the direct materials purchase-price variance for the period, rounded to the nearest dollar.
2. Calculate the direct materials usage variance for the period, rounded to the nearest whole dollar.
3. Provide the correct summary journal entry to record the purchase, on credit, of materials during the period.
4. Provide the correct summary journal to record direct materials cost for materials issued to production during the period.

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Definitions:

Compounded Annually

Interest on an investment or loan calculated once a year, taking into account the interest that has accrued in the previous period.

Current Economic Value

An estimation of the present worth of an asset or company based on its capacity to generate income in the current economic environment.

Compounded Monthly

A method where interest is calculated monthly and added to the principal sum, resulting in interest on interest.

Periodic Interest Rate

The interest rate charged or paid over a specific period of time, often expressed as a percentage.