Chapter 8, Problem 14E

Refer to Exercise 8-13. Hart Company records standard costs in its material variances in separate accounts when it assigns material costs to the Work in Process Inventory account.

1. Show the journal entry that both charges the direct materials costs to the Work in Process Inventory account and records the materials variances in their proper accounts.
2. Assume that Hart’s materials variance are the only variances accumulated in the accounting period and that they are immaterial. Prepare the adjusting journal entries to close the variance accounts at period-end.
3. Identify the variance that should be investigated according to the management by exception concept. Explain.