Atoka Manufacturing Uses a Standard Cost System Actual Purchases of Direct Materials for the Current Month Are

question 197

Multiple Choice

Atoka Manufacturing uses a standard cost system. Standards for direct materials are as follows: $$\begin{array} { | l | r | } \hline \text { Direct materials (pounds per unit of output) } & 2 \\\hline \text { Cost per pound of direct materials } & \$ 6 \\\hline\end{array}$$ Actual purchases of direct materials for the current month are 10,000 pounds for $50,400. Planned and actual production for the month is 3000 units. Atoka has issued 10,000 pounds of direct materials to production. The journal entry to record this transaction is ________.

• A) a debit to Work-in-Process Inventory for $30,240, a credit to Raw Materials Inventory for $36,000, and a debit to Direct Materials Efficiency Variance for $5760
• B) a debit to Work-in-Process Inventory for $30,240, a credit to Raw Materials Inventory for $60,000, and a debit to Direct Materials Efficiency Variance for $29,760
• C) a debit to Work-in-Process Inventory for $36,000, a credit to Raw Materials Inventory for $60,000, and a debit to Direct Materials Efficiency Variance for $24,000
• D) a debit to Work-in-Process Inventory for $60,000, a credit to Raw Materials Inventory for $50,400, and a credit to Direct Materials Efficiency Variance for $9600

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Definitions:

Natural Monopoly

A market condition in which a single firm can supply a good or service to an entire market at a lower cost than could two or more firms.

Patent Laws

Legal statutes that grant inventors exclusive rights to their inventions, preventing others from making, using, or selling the invention for a certain period of time.

Copyright Laws

Regulations that protect the exclusive rights of creators over their original works, including the right to reproduce, distribute, and adapt these works.

Profit-Maximization

A method used by businesses to determine the sale price and production level that lead to the highest possible profit.