During the Week, Hoster's Potato Chip Manufacturing Facility Purchased 20,000

question 175

Essay

During the week, Hoster's potato chip manufacturing facility purchased 20,000 kilograms of potatoes at a price of $1.40 per kilogram. The standard price per kilogram is $1.25. During the week, 19,500 kg of potatoes were used. The standard quantity of potatoes that should have been used for the actual volume of output was 19,200 kg.
Record the following transactions using a standard cost accounting system:
1. The purchase of potatoes
2. The use of potatoes
3. Are the variances favourable or unfavourable? Explain