Compound A39A Is Used by Ashline Corporation to Make One

question 44

Essay

Compound A39A is used by Ashline Corporation to make one of its products.The standard cost of compound A39A is $32.00 per ounce and the standard quantity is 8.5 per unit of output.Data concerning the compound in the most recent month appear below:
The raw material was purchased on account.
Required:
a.Record the purchase of the raw material in a journal entry.
b.Record the use of the raw material in production in a journal entry.
$\begin{array}{llcc} \text {Cost of material purchased in October, per ounce........ } & \$32.80 \\ \text {Material purchased in October, ounces........................ } &7,300\\ \text { Material used in production in October, ounces.......... } &7,220\\ \text { Actual output in October, units................................. } &800\\\end{array}$

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums, which are constant regardless of business activity levels.

Trade Discount

A discount granted by the supplier to a purchaser of goods for resale.

Trade Discount

A reduction in the retail price provided by a seller to a buyer, often based on the quantity of goods purchased or to encourage prompt payment.

Trade Discount

A deduction from the list price of goods, provided by a seller to a buyer, often based on volume of purchase or early payment.