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:

State Agency

An organization established by a state government to carry out specific functions, such as regulating industries or providing services.

Intellectual Property

Property that results from intellectual, creative processes. Copyrights, patents, and trademarks are examples of intellectual property.

Trademark

A distinctive mark, motto, device, or emblem that a manufacturer stamps, prints, or otherwise affixes to the goods it produces so that they can be identified on the market and their origins made known. Once a trademark is established (under common law or through registration), the owner is entitled to its exclusive use.

Patent

A government grant that gives an inventor the exclusive right or privilege to make, use, or sell an invention for a limited time period.