Direct Materials Variances: Journal Entries

Chypre, Inc., produces a cologne mist using a solvent mix (water and pure alcohol) and aromatic compounds (the scent base) that it sells to other companies for bottling and sale to consumers. Chypre developed the following standard cost sheet:

Direct Material	Mix		Mix Proportion	SP	Standard Cost
Solvent mix	760	gallons	0.95	$ 5.27	$ 4,005.20
Aromatic compounds	40		0.05	8,000.00	320,000.00
Total	800	gallons			$324,005.20
Yield	720	gallons

On May 2, Chypre produced a batch of 1,000 gallons with the following actual results:

Direct Material	Actual Mix
Solvent mix	945	gallons
Aromatic compounds	55
Total	1,000	gallons
Yield	880	gallons

Chypre, Inc., purchased the amount used of each direct material input on May 2 for the following actual prices: solvent mix for $5.20 per gallon, and aromatic compound for $8,010 per gallon.

Required:

1. Compute the direct materials price variances. If required, round your answers to the nearest cent.

Solvent mix:
MPV	____	Favorable or Unfavorable
Aromatic compounds:
MPV	____	Favorable or Unfavorable

Feedback

MPV (Materials price variance) = (AP SP) x AQ As a general rule, in a standard costing system, all inventories are carried at standard. Actual costs are never entered into inventory.

Journalize the direct materials price variances. If required, round your answers to the nearest cent. If an amount box does not require an entry, leave it blank or enter "0".

Solvent mix:	Materials	____	____
	Direct Materials Price Variance	____	____
	Accounts Payable	____	____
Aromatic compounds:	Materials	____	____
	Direct Materials Price Variance	____	____
	Accounts Payable	____	____
Combined:	Materials	____	____
	Direct Materials Price Variance	____	____
	Accounts Payable	_____	____

Feedback

MPV (Materials price variance) = (AP SP) x AQ As a general rule, in a standard costing system, all inventories are carried at standard. Actual costs are never entered into inventory.

2. Compute the direct materials usage variance. In your computations, round the standard quantities to two decimal places. Round your final answer to the nearest cent. ____ Favorable or unfavorable

Feedback

MUV (Materials usage variance) = (AQ SQ) x SP

Journalize the direct materials usage variances. In your computations, round the standard quantities to two decimal places. Round your final answers to the nearest cent. If an amount box does not require an entry, leave it blank or enter "0".

Solvent mix:	Work in Process	____	____
	Direct Materials Usage Variance	____	____
	Materials	____	____
Aromatic compounds:	Work in Process	____	____
	Direct Materials Usage Variance	____	____
	Materials	____	____
Combined	Work in Process	____	____
	Direct Materials Usage Variance	____	____
	Materials	____	____