Accounting entries for a standard costing system A company uses Material Z in several of its manufacturing processes. On 1 November, 9000 kilos of the material were in stock. These materials cost £9630 when purchased. Receipts and issues of Material Z during November were:

The company operates a standard costing system.
The standard cost of Material Z during November was £1.04 per kilo.
Process | is exclusively concerned with the production of Product X. Production information for November is as follows:

Required:

(a) Prepare the stock account and material price variance account for Material Z for the month of November on the assumption that:
(i) The material price variance is identified on purchase of material.
(ii) The material price variance is identified at the time of issue of material to production (assume that the weighted average pricing method is used).

(b) State which of the above two methods,

(a) (i)
or

(a) (ii), you would prefer. State briefly the reasons for your preference. (4 marks)

(c) Prepare the account for Process 1 for the month of November. (Assume that Material Z is charged to the process at standard price.)

Transcribed Image Text:

Receipts 4 November, 10 000 kilos costing 10530 23 November, 8000 kilos costing 8480 Issues 2 November, 2000 kilos to Process 1 7 November, 4500 kilos to Process 2 20 November, 4000 kilos to Process 1 27 November, 6000 kilos to Process 3