Esteban Products produces instructional aids, including white boards, which use colored markers instead of chalk. These are particularly popular for conference rooms in educational institutions and executive offices of large corporations. The standard cost of materials for this product is 12 pounds at $8.75 per pound. During the first month of the year, 3,700 boards were produced. Information concerning actual costs and usage of materials follows: Materials purchased 44,000 lbs. @ $8.85 Materials used 43,500 lbs. Required: 1. Compute the materials price and usage variances. 2. Prepare journal entries on Jan. 31 for all activity relating to materials. CHART OF ACCOUNTS General Ledger ASSETS 110 Cash 120 Accounts Receivable 131 Supplies 132 Prepaid Insurance 141 Materials 142 Work in Process 143 Overhead Control 144 Finished Goods 170 Land 180 Equipment 181 Accumulated Depreciation LIABILITIES 210 Accounts Payable 220 Accrued Payroll 230 Utilities Payable 240 Lease Payable EQUITY 310 Common Stock 320 Retained Earnings REVENUE 410 Sales EXPENSES 510 Cost of Goods Sold 511 Materials Price Variance 512 Materials Usage Variance 513 Labor Efficiency Variance 514 Labor Rate Variance 520 Insurance Expense 530 Wages Expense 540 Supplies Expense 550 Utilities Expense 560 Depreciation Expense 590 Miscellaneous Expense

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Esteban Products produces instructional aids, including white boards, which use colored markers instead of chalk. These are particularly popular for conference rooms in educational institutions and executive offices of large corporations. The standard cost of materials for this product is 12 pounds at $8.75 per pound.

During the first month of the year, 3,700 boards were produced. Information concerning actual costs and usage of materials follows:

Materials purchased	44,000 lbs. @ $8.85
Materials used	43,500 lbs.

	Required:
1.	Compute the materials price and usage variances.
2.	Prepare journal entries on Jan. 31 for all activity relating to materials.

CHART OF ACCOUNTS

General Ledger

	ASSETS
110	Cash
120	Accounts Receivable
131	Supplies
132	Prepaid Insurance
141	Materials
142	Work in Process
143	Overhead Control
144	Finished Goods
170	Land
180	Equipment
181	Accumulated Depreciation

	LIABILITIES
210	Accounts Payable
220	Accrued Payroll
230	Utilities Payable
240	Lease Payable

	EQUITY
310	Common Stock
320	Retained Earnings

	REVENUE
410	Sales

	EXPENSES
510	Cost of Goods Sold
511	Materials Price Variance
512	Materials Usage Variance
513	Labor Efficiency Variance
514	Labor Rate Variance
520	Insurance Expense
530	Wages Expense
540	Supplies Expense
550	Utilities Expense
560	Depreciation Expense
590	Miscellaneous Expense

1. Compute the materials price and usage variances.
Materials price variance s
Materials usage variance
$
Journal
2. Prepare journal entries on Jan. 31 for all activity relating to materials. Refer to the Chart of Accounts for the exact wording of account titles.
PAGE 10
GENERAL JOURNAL
DATE
ACCOUNT
POST. REF.
DEBIT
CREDIT
1
2
4
5
6

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