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

question 151

Multiple Choice

Atoka Manufacturing uses a standard cost system.Standards for direct materials are as follows: $$\begin{array} { | l | r | } \hline \text { Direct materials (pounds per unit of output) } & 2 \\\hline \text { Cost per pound of direct materials } & \$ 5 \\\hline\end{array}$$ Actual purchases of direct materials for the current month are 10,000 pounds for $48,000.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 $28,800, a credit to Raw Materials Inventory for $30,000, and a debit to Direct Materials Efficiency Variance for $1200
• B) a debit to Work-in-Process Inventory for $28,800, a credit to Raw Materials Inventory for $50,000, and a debit to Direct Materials Efficiency Variance for $21,200
• C) a debit to Work-in-Process Inventory for $30,000, a credit to Raw Materials Inventory for $50,000, and 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, and a credit to Direct Materials Efficiency Variance for $2000

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Definitions:

Section 402A

A legal provision defining the manufacturer's liability for defective goods that cause harm, even if all possible care was exercised during production.

Restatements (Second) of Torts

A set of treatises or legal reference books that summarize the general common law principles in the United States regarding torts, explicitly presenting the second revision of these principles.

Disclaimer of Liability

A statement that aims to limit one's responsibility for any harm or damages incurred by others as a result of using provided services or products.

Express Warranty

An explicit promise or guarantee about the quality or nature of a product, made by a seller to induce the buyer to purchase.