In this scenario, Nighthawk, Inc. produced 4,000 units that require eight standard pounds per unit at $3 per pound. To record the standard direct materials used in production, we'll analyze the given information and perform some calculations.
First, let's find the standard quantity and cost:
Standard quantity per unit = 8 pounds
Standard cost per pound = $3
Next, let's calculate the standard quantity and cost for 4,000 units:
Standard quantity = 4,000 units * 8 pounds/unit = 32,000 pounds
Standard cost = 32,000 pounds * $3/pound = $96,000
The company actually used 35,000 pounds in production, which is 3,000 pounds more than the standard. The total cost of actual materials used:
Actual cost = 35,000 pounds * $3/pound = $105,000
Now, we'll find the direct materials quantity variance:
Direct Materials Quantity Variance = (Actual quantity - Standard quantity) * Standard cost per pound
= (35,000 pounds - 32,000 pounds) * $3/pound = 3,000 pounds * $3/pound = $9,000
The journal entry to record the standard direct materials used in production would include:
a. Debit to Direct Materials Quantity Variance for $9,000
b. Debit to Work in Process for $96,000
c. Credit to Materials for $105,000
This entry reflects that the company used more materials than the standard, resulting in a variance of $9,000. The Work in Process account is debited for the standard cost, while the Materials account is credited for the actual cost.