When the Actual Amount of a Raw Material Used in Production

question 17

Multiple Choice

When the actual amount of a raw material used in production is less than the standard amount allowed for the actual output, the journal entry would include:

• A) Debit to Raw Materials; Credit to Materials Quantity Variance
• B) Debit to Work-In-Process; Credit to Materials Quantity Variance
• C) Debit to Raw Materials; Debit to Materials Quantity Variance
• D) Debit to Work-In-Process; Debit to Materials Quantity Variance

---

Definitions:

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue, indicating financial health.

Return On Assets

A financial metric that measures the profitability of a company in relation to its total assets.

Profit Margin

A financial metric that measures the amount of net income earned with each dollar of sales by calculating the percentage of revenue that translates into profits.

Annual Depreciation

The yearly accounting charge representing the cost allocation of the value of an asset over its useful life.