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Exam 19: Flexible Budgets, Standard Costs, and Variance Analysis

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Question 21

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Johanson Corporation uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold.The standard cost card for the company's only product is as follows: During the year, the company purchased 89,600 pounds of raw material at a price of $7.80 per pound and used 79,120 pounds of the raw material to produce 23,300 units of work in process. Assume that all transactions are recorded on a worksheet as shown in the text.On the left-hand side of the equals sign in the worksheet are columns for Cash, Raw Materials, Work in Process, Finished Goods, and PP&E (net) .All of the variance columns are on the right-hand-side of the equals sign along with the column for Retained Earnings. When recording the raw materials purchases, the Raw Materials inventory account will increase (decrease) by:

A) $698,880
B) ($716,800)
C) ($698,880)
D) $716,800

E) B) and D)
F) All of the above

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Question 22

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The ending balance in the Work in Process account will be closest to:

A) $0
B) $259,930
C) $649,130
D) $746,430

E) None of the above
F) A) and D)

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Question 23

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When recording the direct labor costs in transaction (c) above, the Cash account will increase (decrease) by:

Dews Corporation manufactures one product.It does not maintain any beginning or ending Work in Process inventories.The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold.There is no variable manufacturing overhead.The fixed manufacturing overhead standards for the company's only product specify 0.90 hours per unit at $20.50 per hour.The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $369,000 and budgeted activity of 18,000 hours.During the year, 14,100 units were started and completed.Actual fixed overhead costs for the year were $386,200. Assume that all transactions are recorded on a worksheet as shown in the text.On the left-hand side of the equals sign in the worksheet are columns for Cash, Raw Materials, Work in Process, Finished Goods, and PP&E (net) .All of the variance columns are on the right-hand-side of the equals sign along with the column for Retained Earnings. When the fixed manufacturing overhead cost is recorded, which of the following entries will be made?

When recording the direct labor costs, the Cash account will increase (decrease) by:

When the fixed manufacturing overhead cost is recorded, which of the following entries will be made?

Segers Corporation manufactures one product.It does not maintain any beginning or ending Work in Process inventories.The company uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold.There is no variable manufacturing overhead.The company's balance sheet at the beginning of the year was as follows: The standard cost card for the company's only product is as follows: The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $238,000 and budgeted activity of 28,000 hours. During the year, the company completed the following transactions: a.Purchased 51,000 liters of raw material at a price of $9.20 per liter. b.Used 46,100 liters of the raw material to produce 33,000 units of work in process. c.Assigned direct labor costs to work in process.The direct labor workers (who were paid in cash)worked 26,200 hours at an average cost of $19.90 per hour. d.Applied fixed overhead to the 33,000 units in work in process inventory using the predetermined overhead rate multiplied by the number of direct labor-hours allowed.Actual fixed overhead costs for the year were $251,800.Of this total, $165,800 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $86,000 related to depreciation of manufacturing equipment. e.Transferred 33,000 units from work in process to finished goods. f.Sold for cash 34,800 units to customers at a price of $44.00 per unit. g.Completed and transferred the standard cost associated with the 34,800 units sold from finished goods to cost of goods sold. h.Paid $156,000 of selling and administrative expenses. i.Closed all standard cost variances to cost of goods sold. Required: 1.Compute all direct materials, direct labor, and fixed overhead variances for the year. 2.Enter the beginning balances and record the above transactions in the worksheet that appears below.Because of the width of the worksheet, it is in two parts.In your text, these two parts would be joined side-by-side to make one very wide worksheet. 3.Determine the ending balance (e.g., 12/31 balance)in each account.

When the work in process is completed and transferred to finished goods in transaction (e) above, the Finished Goods inventory account will increase (decrease) by:

The ending balance in the Cash account will be closest to:

When the company closes its standard cost variances, the Cost of Goods Sold will increase (decrease) by:

When recording the raw materials used in production in transaction (b) above, the Raw Materials inventory account will increase (decrease) by:

When the direct labor cost is recorded, which of the following entries will be made?

Landoni Corporation uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold.The standards for direct materials for the company's only product specify 2.7 kilos per unit at $5.00 per kilo or $13.50 per unit.During the year, the company purchased 75,200 kilos of raw material at a price of $4.90 per kilo and used 69,290 kilos of the raw material to produce 25,700 units of work in process. Assume that all transactions are recorded on a worksheet as shown in the text.On the left-hand side of the equals sign in the worksheet are columns for Cash, Raw Materials, Work in Process, Finished Goods, and PP&E (net) .All of the variance columns are on the right-hand-side of the equals sign along with the column for Retained Earnings. When recording the raw materials purchases, the Raw Materials inventory account will increase (decrease) by:

When applying fixed manufacturing overhead to production in transaction (d) above, the Work in Process inventory account will increase (decrease) by:

When the direct labor cost is recorded, which of the following entries will be made?

Colbeck Corporation uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold.The standard cost card for the company's only product is as follows: During the year, the company purchased 68,000 gallons of raw material at a price of $5.40 per gallon and used 62,660 gallons of the raw material to produce 18,400 units of work in process. Assume that all transactions are recorded on a worksheet as shown in the text.On the left-hand side of the equals sign in the worksheet are columns for Cash, Raw Materials, Work in Process, Finished Goods, and PP&E (net) .All of the variance columns are on the right-hand-side of the equals sign along with the column for Retained Earnings. When recording the raw materials used in production, the Raw Materials inventory account will increase (decrease) by:

Juliano Corporation uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of Goods Sold.The standard cost card for the company's only product is as follows: During the year, the company purchased 29,700 pounds of raw material at a price of $5.20 per pound and used 25,700 pounds of the raw material to produce 17,200 units of work in process. Assume that all transactions are recorded on a worksheet as shown in the text.On the left-hand side of the equals sign in the worksheet are columns for Cash, Raw Materials, Work in Process, Finished Goods, and PP&E (net) .All of the variance columns are on the right-hand-side of the equals sign along with the column for Retained Earnings. When the raw materials used in production are recorded, which of the following entries will be made?

Trundle Corporation manufactures one product.The company uses a standard cost system in which inventories are recorded at their standard costs.There is no variable manufacturing overhead.The standard cost card for the company's only product is as follows: During the year, the company completed the following transactions concerning raw materials: a.Purchased 99,100 pounds of raw material at a price of $7.90 per pound. b.Used 89,020 pounds of the raw material to produce 34,200 units of work in process. Required: Record the above transactions in the worksheet that appears below.Because of the width of the worksheet, it is in two parts.In your text, these two parts would be joined side-by-side to make one very wide worksheet.The beginning balances have been provided for each of the accounts, including the Property, Plant, and Equipment (net)account which is abbreviated as PP&E (net).

When recording the raw materials used in production in transaction (b) above, the Work in Process inventory account will increase (decrease) by:

When recording the raw materials purchases in transaction (a) above, the Cash account will increase (decrease) by: