Atlace Manufacturers Uses Standard Costing System

question 79

Multiple Choice

Atlace Manufacturers uses standard costing system. Standards for direct materials are as follows: Actual purchases of materials for the current month are 10,000 pounds for $48,000. Planned and actual production for the month is 3,000 units. Atlace has issued 10,000 pounds of raw materials to production. The journal entry to record this transaction would be to:

• A)a debit to Work-in-Process Inventory for $28,800, a credit to Raw Materials Inventory for $30,000, a debit to Direct Materials Efficiency Variance for $1,200.
• B)a debit to Work-in-Process Inventory for $28,800, a credit to Raw Materials Inventory for $50,000, a debit to Direct Materials Efficiency Variance for $28,750.
• C)a debit to Work-in-Process Inventory for $30,000, a credit to Raw Materials Inventory for $50,000, a debit to Direct Materials Efficiency Variance for $20,000.
• D)a debit to Work-in-Process Inventory for $50,000, a credit to Raw Materials Inventory for $48,000, a credit to Direct Materials Efficiency Variance for $50,000.

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Definitions:

Nominal Wage

The amount of money received by a worker per unit of time (hour, day, etc.); money wage.

Real Wage

The amount of goods and services a worker can purchase with his or her nominal wage; the purchasing power of the nominal wage.

Agency Shops

A workplace agreement where employees, whether or not they are union members, must pay union fees for the bargaining services the union provides.

Open Shops

Workplaces where union membership is not required as a condition of employment.