Refer to Exercise 23-8. Hart Company records standard costs in its accounts and its material variances in separate accounts when it assigns materials costs to the Goods in Process Inventory account.
In Exercise 23-8, Hart Company made 3,000 bookshelves using 22,000 board feet of wood costing $ 266,200. The company’s direct materials standards for one bookshelf are 8 board feet of wood at $ 12 per board foot.
(1) Show the journal entry that both charges the direct materials costs to the Goods in Process Inventory account and records the materials variances in their proper accounts.
(2) Assume that Hart’s material variances are the only variances accumulated in the accounting period and that they are immaterial. Prepare the adjusting journal entry to close the variance accounts at period- end.
(3) Identify the variance that should be investigated according to the management by exception concept. Explain.