Accounting Chapter 10b Chapter 10b_version1 Arellanes Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories

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Student name:__________

1) Arellanes 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:

Arellanes Corporation

Balance Sheet

January 1

Assets

Cash $ 1,070,000

Raw materials inventory 21,060

Finished goods inventory 65,520

Property, plant, and equipment (net) 697,200

Total assets $ 1,853,780

Liabilities and Equity

Retained earnings $ 1,853,780

Total liabilities and equity $ 1,853,780

The standard cost card for the company’s only product is as follows:

Inputs Standard Quantity or Hours Standard

Price or Rate Standard Cost

Direct materials 2.7 kilos $ 6.50 per kilo $ 17.55

Direct labor 0.90 hours $ 21.50 per hour 19.35

Fixed manufacturing overhead 0.90 hours $ 11.00 per hour

9.90

Total standard cost per unit $ 46.80

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The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $198,000 and budgeted activity of 18,000 hours.

During the year, the company completed the following transactions:

a. Purchased 75,900 kilos of raw material at a price of $6.40 per kilo.

b. Used 68,680 kilos of the raw material to produce 25,400 units of work in process.

c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in

cash) worked 24,160 hours at an average cost of $19.80 per hour.

d. Applied fixed overhead to the 25,400 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 $187,400. Of this total, $95,400 related to items such as

insurance, utilities, and indirect labor salaries that were all paid in cash and $92,000 related to

depreciation of manufacturing equipment.

e. Transferred 25,400 units from work in process to finished goods.

f. Sold for cash 24,200 units to customers at a price of $52.80 per unit.

g. Completed and transferred the standard cost associated with the 24,200 units sold from

finished goods to cost of goods sold.

h. Paid $121,000 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.

Cash Raw Materials Work in Process Finished Goods PP&E

(net) = Materials Price Variance Materials Quantity Variance

Labor Rate Variance Labor Efficiency Variance FOH Budget

Variance FOH Volume Variance Retained Earnings

1/1 =

a. =

b. =

c. =

d. =

e. =

f. =

Version 1 3

g. =

h. =

i. =

12/31 =

3. Determine the ending balance (e.g., 12/31 balance) in each account.

4. Prepare an income statement for the year.

2) Grafton Corporation manufactures one product. It does not maintain any beginning or

ending 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. Its standard

cost per unit produced is $38.85. During the year, the company produced and sold 28,200 units at

a price of $50.10 per unit and its selling and administrative expenses totaled $120,000. The

company does not have any variable manufacturing overhead costs. It recorded the following

variances during the year:

Materials price variance $ 61,670 F

Materials quantity variance $ 700 F

Labor rate variance $ 8,776 U

Labor efficiency variance $ 12,300 F

Fixed manufacturing overhead budget variance $ 16,400 F

Fixed manufacturing overhead volume variance $ 21,560 U

Required:

Prepare an income statement for the year.

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3) Buchauer 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:

Buchauer Corporation

Balance Sheet

January 1

Assets

Cash $ 1,010,000

Raw materials inventory 32,110

Finished goods inventory 65,340

Property, plant, and equipment (net) 526,900

Total assets $ 1,634,350

Liabilities and Equity

Retained earnings $ 1,634,350

Total liabilities and equity $ 1,634,350

The standard cost card for the company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price

or Rate Standard Cost

Direct materials 1.3 pounds $ 6.50 per pound $ 8.45

Direct labor 0.70 hours $ 18.50 per hour 12.95

Fixed manufacturing overhead 0.70 hours $ 4.00 per hour 2.80

Total standard cost per unit $ 24.20

The company calculated the following variances for the year:

Materials price variance $ 12,040 U

Materials quantity variance $ 650 U

Labor rate variance $ 1,524 F

Labor efficiency variance $ 7,400 U

Fixed manufacturing overhead budget variance $ 12,800 U

Fixed manufacturing overhead volume variance $ 17,360 F

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The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $42,000 and budgeted activity of 10,500 hours.

During the year, the company completed the following transactions:

a. Purchased 30,100 pounds of raw material at a price of $6.90 per pound.

b. Used 27,660 pounds of the raw material to produce 21,200 units of work in process.

c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in

cash) worked 15,240 hours at an average cost of $18.40 per hour.

d. Applied fixed overhead to the 21,200 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 $54,800. Of this total, -$10,200 related to items such as

insurance, utilities, and indirect labor salaries that were all paid in cash and $65,000 related to

depreciation of manufacturing equipment.

e. Transferred 21,200 units from work in process to finished goods.

f. Sold for cash 22,800 units to customers at a price of $29.70 per unit.

g. Completed and transferred the standard cost associated with the 22,800 units sold from

finished goods to cost of goods sold.

h. Paid $74,000 of selling and administrative expenses.

i. Closed all standard cost variances to cost of goods sold.

Required:

1. Enter the beginning balances and record the above transactions in the worksheet that appears

below.

Cash Raw Materials Work in Process Finished Goods PP&E

(net) = Materials Price Variance Materials Quantity Variance

Labor Rate Variance Labor Efficiency Variance FOH Budget

Variance FOH Volume Variance Retained Earnings

1/1 =

a. =

b. =

c. =

d. =

e. =

f. =

Version 1 6

g. =

h. =

i. =

12/31 =

2.Determine the ending balance (e.g., 12/31 balance) in each account.

3. Prepare an income statement for the year.

4) Lusher 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 standard cost card for the

company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 1.5 kilos $ 5.00 per kilo $ 7.50

Direct labor 0.7 hours $ 22.00 per hour 15.40

Fixed manufacturing overhead 0.7 hours $ 5.50 per hour 3.85

Total standard cost per unit $ 26.75

The company calculated the following variances for the year:

Materials price variance $ 23,225 U

Materials quantity variance $ 500 F

Labor rate variance $ 24,792 U

Labor efficiency variance $ 26,400 U

Fixed manufacturing overhead budget variance $ 15,535 U

Fixed manufacturing overhead volume variance $ 7,315 F

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The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $99,715 and budgeted activity of 18,130 hours.

During the year, the company completed the following transactions:

a.Purchased 46,450 kilos of raw material at a price of $5.50 per kilo.

b.Used 41,600 kilos of the raw material to produce 27,800 units of work in process.

c.Assigned direct labor costs to work in process. The direct labor workers (who were paid in

cash) worked 20,660 hours at an average cost of $23.20 per hour.

d.Applied fixed overhead to the 27,800 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 $115,250. Of this total, $40,250 related to items such as

insurance, utilities, and indirect labor salaries that were all paid in cash and $75,000 related to

depreciation of manufacturing equipment.

e.Transferred 27,800 units from work in process to finished goods.

f.Sold for cash 30,600 units to customers at a price of $33.60 per unit.

g.Completed and transferred the standard cost associated with the 30,600 units sold from

finished goods to cost of goods sold.

h.Paid $171,000 of selling and administrative expenses.

i.Closed all standard cost variances to cost of goods sold.

Required:

1. Record the above transactions in the worksheet that appears below. 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).

Cash Raw Materials Work in Process Finished Goods PP&E (net) =

Materials Price Variance Materials Quantity Variance Labor Rate

Variance Labor Efficiency Variance FOH Budget Variance FOH Volume

Variance Retained Earnings

1/1 $ 1,200,000 $ 42,000 $ 0 $ 80,250 $ 513,600 = $ 0 $ 0

$ 0 $ 0 $ 0 $ 0 $ 1,835,850

a. =

b. =

c. =

d. =

e. =

f. =

g. =

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h. =

i. =

12/31 =

2. Determine the ending balance (e.g., 12/31 balance) in each account.

3. Prepare an income statement for the year.

5) Floria 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:

Floria Corporation

Balance Sheet

January 1

Assets

Cash $ 1,020,000

Raw materials inventory 31,395

Finished goods inventory 52,535

Property, plant, and equipment (net) 597,100

Total assets $ 1,701,030

Liabilities and Equity

Retained earnings $ 1,701,030

Total liabilities and equity $ 1,701,030

The standard cost card for the company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 2.1 gallons $ 6.50 per gallon $ 13.65

Direct labor 0.50 hours $ 19.50 per hour 9.75

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Fixed manufacturing overhead 0.50 hours $ 8.50 per hour 4.25

Total standard cost per unit $ 27.65

The company calculated the following variances for the year:

Materials price variance $ 61,650 F

Materials quantity variance $ 650 U

Labor rate variance $ 7,275 F

Labor efficiency variance $ 17,550 F

Fixed manufacturing overhead budget variance $ 11,600 U

Fixed manufacturing overhead volume variance $ 17,425 U

The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $148,750 and budgeted activity of 17,500 hours.

During the year, the company completed the following transactions:

a. Purchased 68,500 gallons of raw material at a price of $5.60 per gallon.

b. Used 64,990 gallons of the raw material to produce 30,900 units of work in process.

c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in

cash) worked 14,550 hours at an average cost of $19.00 per hour.

d. Applied fixed overhead to the 30,900 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 $160,350. Of this total, $78,350 related to items such as

insurance, utilities, and indirect labor salaries that were all paid in cash and $82,000 related to

depreciation of manufacturing equipment.

e. Transferred 30,900 units from work in process to finished goods.

f. Sold for cash 27,200 units to customers at a price of $33.50 per unit.

g. Completed and transferred the standard cost associated with the 27,200 units sold from

finished goods to cost of goods sold.

h. Paid $79,000 of selling and administrative expenses.

i. Closed all standard cost variances to cost of goods sold.

Required:

1. Enter the beginning balances and record the above transactions in the worksheet that appears

below.

Cash Raw Materials Work in Process Finished Goods PP&E (net) =

Materials Price Variance Materials Quantity Variance Labor Rate

Variance Labor Efficiency Variance FOH Budget Variance FOH Volume

Variance Retained Earnings

1/1 =

Version 1 10

a. =

b. =

c. =

d. =

e. =

f. =

g. =

h. =

i. =

12/31 =

2.Determine the ending balance (e.g., 12/31 balance) in each account.

6) Millonzi 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:

Millonzi Corporation

Balance Sheet

January 1

Assets

Cash $ 1,170,000

Raw materials inventory 52,725

Finished goods inventory 81,060

Property, plant, and equipment (net) 601,000

Total assets $ 1,904,785

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Liabilities and Equity

Retained earnings $ 1,904,785

Total liabilities and equity $ 1,904,785

The standard cost card for the company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 3.7 liters $ 9.50 per liter $ 35.15

Direct labor 0.90 hours $ 18.50 per hour 16.65

Fixed manufacturing overhead 0.90 hours $ 17.50 per hour 15.75

Total standard cost per unit $ 67.55

The company calculated the following variances for the year:

Materials price variance $ 16,800 F

Materials quantity variance $ 950 F

Labor rate variance $ 5,484 U

Labor efficiency variance $ 3,700 F

Fixed manufacturing overhead budget variance $ 11,100 F

Fixed manufacturing overhead volume variance $ 152,775 U

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The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $236,250 and budgeted activity of 13,500 hours.

During the year, the company completed the following transactions:

a. Purchased 21,000 liters of raw material at a price of $8.70 per liter.

b. Used 19,510 liters of the raw material to produce 5,300 units of work in process.

c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in

cash) worked 4,570 hours at an average cost of $19.70 per hour.

d. Applied fixed overhead to the 5,300 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 $225,150. Of this total, $165,150 related to items such as

insurance, utilities, and indirect labor salaries that were all paid in cash and $60,000 related to

depreciation of manufacturing equipment.

e. Transferred 5,300 units from work in process to finished goods.

f. Sold for cash 5,500 units to customers at a price of $108.90 per unit.

g. Completed and transferred the standard cost associated with the 5,500 units sold from

finished goods to cost of goods sold.

h. Paid $27,000 of selling and administrative expenses.

i. Closed all standard cost variances to cost of goods sold.

Required:

1. Enter the beginning balances and record the above transactions in the worksheet that appears

below.

Cash Raw Materials Work in Process Finished Goods PP&E (net) =

Materials Price Variance Materials Quantity Variance Labor Rate

Variance Labor Efficiency Variance FOH Budget Variance FOH Volume

Variance Retained Earnings

1/1 =

a. =

b. =

c. =

d. =

e. =

f. =

Version 1 13

g. =

h. =

i. =

12/31 =

2.Determine the ending balance (e.g., 12/31 balance) in each account.

7) Gathman 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:

Gathman Corporation

Balance Sheet

January 1

Assets

Cash $ 998,980

Raw materials inventory 27,790

Finished goods inventory 73,745

Property, plant, and equipment (net) 784,800

Total assets $ 1,885,315

Liabilities and Equity

Retained earnings $ 1,885,315

Total liabilities and equity $ 1,885,315

The standard cost card for the company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 1.3 pounds $ 4.00 per pound $ 5.20

Version 1 14

Direct labor 0.6 hours $ 23.00 per hour 13.80

Fixed manufacturing overhead 0.6 hours $ 5.30 per hour 3.18

Total standard cost per unit $ 22.18

The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $79,500 and budgeted activity of 15,000 hours.

During the year, the company completed the following transactions:

a.Purchased 18,800 pounds of raw material at a price of $3.70 per pound.

b.Used 23,240 pounds of the raw material to produce 17,800 units of work in process.

c.Assigned direct labor costs to work in process. The direct labor workers (who were paid in

cash) worked 11,680 hours at an average cost of $22.00 per hour.

d.Applied fixed overhead to the 17,800 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 $133,570. Of this total, $29,020 related to items such as

insurance, utilities, and indirect labor salaries that were all paid in cash and $104,550 related to

depreciation of manufacturing equipment.

e.Transferred 17,800 units from work in process to finished goods.

f.Sold for cash 17,600 units to customers at a price of $75.60 per unit.

g.Completed and transferred the standard cost associated with the 17,600 units sold from

finished goods to cost of goods sold.

h.Paid $72,740 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.

Cash Raw Materials Work in Process Finished Goods PP&E (net) =

Materials Price Variance Materials Quantity Variance Labor Rate

Variance Labor Efficiency Variance FOH Budget Variance FOH Volume

Variance Retained Earnings

1/1 =

a. =

b. =

c. =

d. =

e. =

Version 1 15

f. =

g. =

h. =

i. =

12/31 =

3. Determine the ending balance (e.g., 12/31 balance) in each account.

4. Prepare an income statement for the year.

8) Lanciotti 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 standard cost card for the

company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 2.6 pounds $ 6.50 per pound $ 16.90

Direct labor 0.80 hours $ 20.00 per hour 16.00

Fixed manufacturing overhead 0.80 hours $ 11.50 per hour 9.20

Total standard cost per unit $ 42.10

The company calculated the following variances for the year:

Materials price variance $ 44,040 F

Materials quantity variance $ 650 F

Labor rate variance $ 52,308 U

Labor efficiency variance $ 54,000 F

Fixed manufacturing overhead budget variance $ 10,200 F

Fixed manufacturing overhead volume variance $ 89,240 F

Version 1 16

The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $276,000 and budgeted activity of 24,000 hours.

During the year, the company completed the following transactions:

a. Purchased 110,100 pounds of raw material at a price of $6.10 per pound.

b. Used 103,120 pounds of the raw material to produce 39,700 units of work in process.

c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in

cash) worked 29,060 hours at an average cost of $21.80 per hour.

d. Applied fixed overhead to the 39,700 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 $265,800. Of this total, $198,800 related to items such as

insurance, utilities, and indirect labor salaries that were all paid in cash and $67,000 related to

depreciation of manufacturing equipment.

e. Transferred 39,700 units from work in process to finished goods.

f. Sold for cash 34,600 units to customers at a price of $50.90 per unit.

g. Completed and transferred the standard cost associated with the 34,600 units sold from

finished goods to cost of goods sold.

h. Paid $150,000 of selling and administrative expenses.

i. Closed all standard cost variances to cost of goods sold.

Required:

1. Record the above transactions in the worksheet that appears below. 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).

Cash Raw Materials Work in Process Finished Goods PP&E (net) =

Materials Price Variance Materials Quantity Variance Labor Rate

Variance Labor Efficiency Variance FOH Budget Variance FOH Volume

Variance Retained Earnings

1/1 $ 1,020,000 $ 52,390 $ 0 $ 84,200 $ 538,800 = $ 0 $ 0

$ 0 $ 0 $ 0 $ 0 $ 1,695,390

a. =

b. =

c. =

d. =

e. =

Version 1 17

f. =

g. =

h. =

i. =

12/31 =

2. Determine the ending balance (e.g., 12/31 balance) in each account.

3. Prepare an income statement for the year.

9) Herriot 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 standard cost card for the

company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 3.7 pounds $ 7.50 per pound $ 27.75

Direct labor 0.90 hours $ 18.50 per hour 16.65

Fixed manufacturing overhead 0.90 hours $ 19.00 per hour 17.10

Total standard cost per unit $ 61.50

Version 1 18

The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $598,500 and budgeted activity of 31,500 hours.

During the year, the company applied fixed overhead to the 37,500 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 $609,000. Of this total, $549,000 related

to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and

$60,000 related to depreciation of manufacturing equipment.

Required:

Completely record the transactions involving fixed overhead, including any variances, in the

worksheet that appears below. 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).

Cash Raw Materials Work in Process Finished Goods PP&E (net) =

Materials Price Variance Materials Quantity Variance Labor Rate

Variance Labor Efficiency Variance FOH Budget Variance FOH Volume

Variance Retained Earnings

1/1 $ 1,030,000 $ 58,275 $ 0 $ 86,100 $ 475,300 = $ 0 $ 0

$ 0 $ 0 $ 0 $ 0 $ 1,649,675

=

10) Obenshain Corporation manufactures one product. The company uses a standard cost

system in which inventories are recorded at their standard costs. The standard cost card for the

company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 2.7 liters $ 9.00 per liter $ 24.30

Direct labor 0.80 hours $ 21.00 per hour 16.80

Version 1 19

Fixed manufacturing overhead 0.80 hours $ 16.00 per hour 12.80

Total standard cost per unit $ 53.90

During the year, direct labor workers (who were paid in cash) worked 12,880 hours at an

average cost of $20.00 per hour on 17,600 units. These units were started and completed during

the year.

Required:

Completely record the direct labor costs, along with any direct labor variances, in the below

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).

Cash Raw Materials Work in Process Finished Goods PP&E (net) =

Materials Price Variance Materials Quantity Variance Labor Rate

Variance Labor Efficiency Variance FOH Budget Variance FOH Volume

Variance Retained Earnings

1/1 $ 1,010,000 $ 34,020 $ 0 $ 48,510 $ 721,000 = $ 0 $ 0

$ 0 $ 0 $ 0 $ 0 $ 1,813,530

=

11) 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:

Segers Corporation

Balance Sheet

January 1

Assets

Cash $ 1,160,000

Raw materials inventory 46,550

Version 1 20

Finished goods inventory 74,970

Property, plant, and equipment (net) 704,600

Total assets $ 1,986,120

Liabilities and Equity

Retained earnings $ 1,986,120

Total liabilities and equity $ 1,986,120

The standard cost card for the company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 1.4 liters $ 9.50 per liter $ 13.30

Direct labor 0.80 hours $ 19.50 per hour 15.60

Fixed manufacturing overhead 0.80 hours $ 8.50 per hour 6.80

Total standard cost per unit $ 35.70

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.

Version 1 21

Cash Raw Materials Work in Process Finished Goods PP&E (net) =

Materials Price Variance Materials Quantity Variance Labor Rate

Variance Labor Efficiency Variance FOH Budget Variance FOH Volume

Variance Retained Earnings

1/1 =

a. =

b. =

c. =

d. =

e. =

f. =

g. =

h. =

i. =

12/31 =

3. Determine the ending balance (e.g., 12/31 balance) in each account.

12) Pioli 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 standard cost card for the

company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 1.2 kilos $ 5.00 per kilo $ 6.00

Direct labor 0.50 hours $ 29.00 per hour 14.50

Version 1 22

Fixed manufacturing overhead 0.50 hours $ 5.00 per hour 2.50

Total standard cost per unit $ 23.00

The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $37,500 and budgeted activity of 7,500 hours.

During the year, the company completed the following transactions:

a.Purchased 7,300 kilos of raw material at a price of $4.40 per kilo.

b.Used 11,300 kilos of the raw material to produce 9,500 units of work in process.

c.Assigned direct labor costs to work in process. The direct labor workers (who were paid in

cash) worked 4,050 hours at an average cost of $29.80 per hour.

d.Applied fixed overhead to the 9,500 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 $143,900. Of this total, $60,940 related to items such as

insurance, utilities, and indirect labor salaries that were all paid in cash and $82,960 related to

depreciation of manufacturing equipment.

e.Transferred 9,500 units from work in process to finished goods.

f.Sold for cash 10,100 units to customers at a price of $74.50 per unit.

g.Completed and transferred the standard cost associated with the 10,100 units sold from

finished goods to cost of goods sold.

h.Paid $45,650 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. Record the above transactions in the worksheet that appears below. 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).

Cash Raw Materials Work in Process Finished Goods PP&E (net) =

Materials Price Variance Materials Quantity Variance Labor Rate

Variance Labor Efficiency Variance FOH Budget Variance FOH Volume

Variance Retained Earnings

1/1 $ 1,053,060 $ 46,650 $ 0 $ 55,720 $ 728,870 = $ 0 $ 0

$ 0 $ 0 $ 0 $ 0 $ 1,884,300

a. =

b. =

c. =

d. =

e. =

Version 1 23

f. =

g. =

h. =

i. =

12/31 =

3. Determine the ending balance (e.g., 12/31 balance) in each account.

4. Prepare an income statement for the year.

13) Yordy 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:

Yordy Corporation

Balance Sheet

January 1

Assets

Cash $ 1,060,000

Raw materials inventory 40,460

Finished goods inventory 64,350

Property, plant, and equipment (net) 722,000

Total assets $ 1,886,810

Liabilities and Equity

Retained earnings $ 1,886,810

Total liabilities and equity $ 1,886,810

The standard cost card for the company’s only product is as follows:

Version 1 24

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 1.4 kilos $ 8.50 per kilo $ 11.90

Direct labor 0.90 hours $ 19.50 per hour 17.55

Fixed manufacturing overhead 0.90 hours $ 7.00 per hour 6.30

Total standard cost per unit $ 35.75

The company calculated the following variances for the year:

Materials price variance $ 38,960 U

Materials quantity variance $ 850 F

Labor rate variance $ 20,174 U

Labor efficiency variance $ 21,450 U

Fixed manufacturing overhead budget variance $ 11,900 F

Fixed manufacturing overhead volume variance $ 26,460 U

The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $220,500 and budgeted activity of 31,500 hours.

During the year, the company completed the following transactions:

a. Purchased 48,700 kilos of raw material at a price of $9.30 per kilo.

b. Used 43,020 kilos of the raw material to produce 30,800 units of work in process.

c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in

cash) worked 28,820 hours at an average cost of $20.20 per hour.

d. Applied fixed overhead to the 30,800 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 $208,600. Of this total, $124,600 related to items such as

insurance, utilities, and indirect labor salaries that were all paid in cash and $84,000 related to

depreciation of manufacturing equipment.

e. Transferred 30,800 units from work in process to finished goods.

f. Sold for cash 32,200 units to customers at a price of $46.60 per unit.

g. Completed and transferred the standard cost associated with the 32,200 units sold from

finished goods to cost of goods sold.

h. Paid $155,000 of selling and administrative expenses.

i. Closed all standard cost variances to cost of goods sold.

Required:

1. Enter the beginning balances and record the above transactions in the worksheet that appears

below.

Cash Raw Materials Work in Process Finished Goods PP&E (net) =

Materials Price Variance Materials Quantity Variance Labor Rate

Version 1 25

Variance Labor Efficiency Variance FOH Budget Variance FOH Volume

Variance Retained Earnings

1/1 =

a. =

b. =

c. =

d. =

e. =

f. =

g. =

h. =

i. =

12/31 =

2.Determine the ending balance (e.g., 12/31 balance) in each account.

3. Prepare an income statement for the year.

14) Zaino 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 standard cost card for the

company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 1.7 gallons $ 5.50 per gallon $ 9.35

Direct labor 0.50 hours $ 21.50 per hour 10.75

Fixed manufacturing overhead 0.50 hours $ 6.50 per hour 3.25

Version 1 26

Total standard cost per unit $ 23.35

The company calculated the following variances for the year:

Materials price variance $ 27,360 F

Materials quantity variance $ 550 U

Labor rate variance $ 2,480 U

Labor efficiency variance $ 12,900 U

Fixed manufacturing overhead budget variance $ 14,700 F

Fixed manufacturing overhead volume variance $ 27,950 F

The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $48,750 and budgeted activity of 7,500 hours.

During the year, the company completed the following transactions:

a. Purchased 45,600 gallons of raw material at a price of $4.90 per gallon.

b. Used 40,220 gallons of the raw material to produce 23,600 units of work in process.

c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in

cash) worked 12,400 hours at an average cost of $21.70 per hour.

d. Applied fixed overhead to the 23,600 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 $34,050. Of this total, −$23,950 related to items such as

insurance, utilities, and indirect labor salaries that were all paid in cash and $58,000 related to

depreciation of manufacturing equipment.

e. Transferred 23,600 units from work in process to finished goods.

f. Sold for cash 23,700 units to customers at a price of $27.20 per unit.

g. Completed and transferred the standard cost associated with the 23,700 units sold from

finished goods to cost of goods sold.

h. Paid $69,000 of selling and administrative expenses.

i. Closed all standard cost variances to cost of goods sold.

Required:

1. Record the above transactions in the worksheet that appears below. 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).

Cash Raw Materials Work in Process Finished Goods PP&E (net) =

Materials Price Variance Materials Quantity Variance Labor Rate

Variance Labor Efficiency Variance FOH Budget Variance FOH Volume

Variance Retained Earnings

1/1 $ 1,090,000 $ 28,050 $ 0 $ 86,395 $ 498,300 = $ 0 $ 0

$ 0 $ 0 $ 0 $ 0 $ 1,702,745

Version 1 27

a. =

b. =

c. =

d. =

e. =

f. =

g. =

h. =

i. =

12/31 =

2.Determine the ending balance (e.g., 12/31 balance) in each account.

15) Siciliano 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:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 1.5 kilos $ 5.00 per kilo $ 7.50

Direct labor 0.60 hours $ 20.00 per hour 12.00

Fixed manufacturing overhead 0.60 hours $ 3.50 per hour 2.10

Total standard cost per unit $ 21.60

Version 1 28

During the year, the company completed the following transactions concerning raw materials:

a. Purchased 34,800 kilos of raw material at a price of $4.60 per kilo.

b. Used 32,750 kilos of the raw material to produce 21,900 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).

Cash Raw Materials Work in Process Finished Goods PP&E (net) =

Materials Price Variance Materials Quantity Variance Labor Rate

Variance Labor Efficiency Variance FOH Budget Variance FOH Volume

Variance Retained Earnings

1/1 $ 1,010,000 $ 57,000 $ 0 $ 56,160 $ 574,100 = $ 0 $ 0

$ 0 $ 0 $ 0 $ 0 $ 1,697,260

a. =

b. =

16) Dobrowolski 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

products are recorded at their standard cost and any variances are closed directly to Cost of

Goods Sold. There is no variable manufacturing overhead. The standard cost card for the

company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 1.8 kilos $ 7.00 per kilo $ 12.60

Direct labor 0.50 hours $ 21.50 per hour 10.75

Fixed manufacturing overhead 0.50 hours $ 7.50 per hour 3.75

Total standard cost per unit $ 27.10

Version 1 29

The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $75,000 and budgeted activity of 10,000 hours.

During the year, the company applied fixed overhead to the 12,900 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 $62,600. Of this total, -$3,400 related to

items such as insurance, utilities, and indirect labor salaries that were all paid in cash and

$66,000 related to depreciation of manufacturing equipment.

Required:

Completely record the transactions involving fixed overhead, including any variances, 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).

Cash Raw Materials Work in Process Finished Goods PP&E (net) =

Materials Price Variance Materials Quantity Variance Labor Rate

Variance Labor Efficiency Variance FOH Budget Variance FOH Volume

Variance Retained Earnings

1/1 $ 1,120,000 $ 36,540 $ 0 $ 62,330 $ 655,000 = $ 0 $ 0

$ 0 $ 0 $ 0 $ 0 $ 1,873,870

=

17) 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:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 2.6 pounds $ 8.00 per pound $ 20.80

Direct labor 0.70 hours $ 21.50 per hour 15.50

Fixed manufacturing overhead 0.70 hours $ 14.50 per hour 10.15

Version 1 30

Total standard cost per unit $ 46.00

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).

Cash Raw Materials Work in Process Finished Goods PP&E (net) =

Materials Price Variance Materials Quantity Variance Labor Rate

Variance Labor Efficiency Variance FOH Budget Variance FOH Volume

Variance Retained Earnings

1/1 $ 1,050,000 $ 56,160 $ 0 $ 64,400 $ 472,900 = $ 0 $ 0

$ 0 $ 0 $ 0 $ 0 $ 1,643,460

a. =

b. =

18) Milanese 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:

Milanese Corporation

Balance Sheet

January 1

Assets

Cash $ 1,091,730

Raw materials inventory 25,980

Finished goods inventory 80,280

Version 1 31

Property, plant, and equipment (net) 652,740

Total assets $ 1,850,730

Liabilities and Equity

Retained earnings $ 1,850,730

Total liabilities and equity $ 1,850,730

The standard cost card for the company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 1.40 gallons $ 6.00 per gallon $ 8.40

Direct labor 0.60 hours $ 26.00 per hour 15.60

Fixed manufacturing overhead 0.60 hours $ 16.30 per hour 9.78

Total standard cost per unit $ 33.78

The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $195,600 and budgeted activity of 12,000 hours.

During the year, the company completed the following transactions:

a.Purchased 28,400 gallons of raw material at a price of $6.90 per gallon.

b.Used 25,020 gallons of the raw material to produce 17,800 units of work in process.

c.Assigned direct labor costs to work in process. The direct labor workers (who were paid in

cash) worked 11,080 hours at an average cost of $26.40 per hour.

d.Applied fixed overhead to the 17,800 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 $206,200. Of this total, $123,140 related to items such as

insurance, utilities, and indirect labor salaries that were all paid in cash and $83,060 related to

depreciation of manufacturing equipment.

e.Transferred 17,800 units from work in process to finished goods.

f.Sold for cash 17,700 units to customers at a price of $48.10 per unit.

g.Completed and transferred the standard cost associated with the 17,700 units sold from

finished goods to cost of goods sold.

h.Paid $53,800 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.

Cash Raw Materials Work in Process Finished Goods PP&E (net) =

Materials Price Variance Materials Quantity Variance Labor Rate

Version 1 32

Variance Labor Efficiency Variance FOH Budget Variance FOH Volume

Variance Retained Earnings

1/1 =

a. =

b. =

c. =

d. =

e. =

f. =

g. =

h. =

i. =

12/31 =

3. Determine the ending balance (e.g., 12/31 balance) in each account.

19) Bascom Incorporated manufactures one product. It does not maintain any beginning or

ending 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. Its standard

cost per unit produced is $25.75. During the year, the company produced and sold 36,000 units at

a price of $31.80 per unit and its selling and administrative expenses totaled $169,000. The

company does not have any variable manufacturing overhead costs. It recorded the following

variances during the year:

Materials price variance $ 4,990 U

Materials quantity variance $ 500 F

Labor rate variance $ 29,889 F

Labor efficiency variance $ 68,400 F

Version 1 33

Fixed manufacturing overhead budget variance $ 11,300 U

Fixed manufacturing overhead volume variance $ 18,585 F

Required:

1. When the company closes its standard cost variances, the cost of goods sold will increase

(decrease) by how much?

2. Prepare an income statement for the year.

20) Santiago 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 standard cost card for the

company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 3.6 liters $ 6.00 per liter $ 21.60

Direct labor 0.60 hours $ 18.50 per hour 11.10

Fixed manufacturing overhead 0.60 hours $ 16.00 per hour 9.60

Total standard cost per unit $ 42.30

Version 1 34

The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $192,000 and budgeted activity of 12,000 hours.

During the year, the company completed the following transactions:

a. Purchased 53,000 liters of raw material at a price of $6.80 per liter.

b. Used 47,620 liters of the raw material to produce 13,200 units of work in process.

c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in

cash) worked 8,220 hours at an average cost of $19.20 per hour.

d. Applied fixed overhead to the 13,200 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 $180,700. Of this total, $116,700 related to items such as

insurance, utilities, and indirect labor salaries that were all paid in cash and $64,000 related to

depreciation of manufacturing equipment.

e. Transferred 13,200 units from work in process to finished goods.

f. Sold for cash 12,800 units to customers at a price of $56.50 per unit.

g. Completed and transferred the standard cost associated with the 12,800 units sold from

finished goods to cost of goods sold.

h. Paid $39,000 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. Record the above transactions in the worksheet that appears below. 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).

Cash Raw Materials Work in Process Finished Goods PP&E (net) =

Materials Price Variance Materials Quantity Variance Labor Rate

Variance Labor Efficiency Variance FOH Budget Variance FOH Volume

Variance Retained Earnings

1/1 $ 1,040,000 $ 60,480 $ 0 $ 59,220 $ 430,400 = $ 0 $ 0

$ 0 $ 0 $ 0 $ 0 $ 1,590,100

a. =

b. =

c. =

d. =

e. =

Version 1 35

f. =

g. =

h. =

i. =

12/31 =

3.Determine the ending balance (e.g., 12/31 balance) in each account.

21) Eagan Corporation manufactures one product. The company uses a standard cost system

in which inventories are recorded at their standard costs. The standard cost card for the

company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 1.0 gallons $ 6.00 per gallon $ 6.00

Direct labor 0.50 hours $ 19.50 per hour 9.75

Fixed manufacturing overhead 0.50 hours $ 3.00 per hour 1.50

Total standard cost per unit $ 17.25

During the year, direct labor workers (who were paid in cash) worked 11,250 hours at an

average cost of $19.70 per hour on 22,300 units. These units were started and completed during

the year.

Required:

Completely record the direct labor costs, along with any direct labor variances, in the below

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).

Cash Raw Materials Work in Process Finished Goods PP&E (net) =

Materials Price Variance Materials Quantity Variance Labor Rate

Variance Labor Efficiency Variance FOH Budget Variance FOH Volume

Variance Retained Earnings

Version 1 36

1/1 $ 1,100,000 $ 43,800 $ 0 $ 87,975 $ 628,300 = $ 0 $ 0

$ 0 $ 0 $ 0 $ 0 $ 1,860,075

=

22) Woodhouse 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 standard cost card for the

company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 2.9 liters $ 5.50 per liter $ 15.95

Direct labor 0.90 hours $ 20.00 per hour 18.00

Fixed manufacturing overhead 0.90 hours $ 9.00 per hour 8.10

Total standard cost per unit $ 42.05

The company calculated the following variances for the year:

Materials price variance $ 11,860 U

Materials quantity variance $ 550 F

Labor rate variance $ 11,914 U

Labor efficiency variance $ 2,000 U

Fixed manufacturing overhead budget variance $ 15,700 U

Fixed manufacturing overhead volume variance $ 30,780 F

Version 1 37

The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $121,500 and budgeted activity of 13,500 hours.

During the year, the company completed the following transactions:

a.Purchased 59,300 liters of raw material at a price of $5.70 per liter.

b. Used 54,420 liters of the raw material to produce 18,800 units of work in process.

c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in

cash) worked 17,020 hours at an average cost of $20.70 per hour.

d. Applied fixed overhead to the 18,800 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 $137,200. Of this total, $30,200 related to items such as

insurance, utilities, and indirect labor salaries that were all paid in cash and $107,000 related to

depreciation of manufacturing equipment.

e. Transferred 18,800 units from work in process to finished goods.

f. Sold for cash 19,100 units to customers at a price of $47.80 per unit.

g. Completed and transferred the standard cost associated with the 19,100 units sold from

finished goods to cost of goods sold.

h. Paid $100,000 of selling and administrative expenses.

i. Closed all standard cost variances to cost of goods sold.

Required:

1. Record the above transactions in the worksheet that appears below. 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).

Cash Raw Materials Work in Process Finished Goods PP&E (net) =

Materials Price Variance Materials Quantity Variance Labor Rate

Variance Labor Efficiency Variance FOH Budget Variance FOH Volume

Variance Retained Earnings

1/1 $ 1,170,000 $ 25,520 $ 0 $ 79,895 $ 778,000 = $ 0 $ 0

$ 0 $ 0 $ 0 $ 0 $ 2,053,415

a. =

b. =

c. =

d. =

e. =

f. =

Version 1 38

g. =

h. =

i. =

12/31 =

2. Determine the ending balance (e.g., 12/31 balance) in each account.

23) Ferrini 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 standard cost card for the

company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 2.7 pounds $ 8.00 per pound $ 21.60

Direct labor 0.50 hours $ 21.00 per hour 10.50

Fixed manufacturing overhead 0.50 hours $ 11.00 per hour 5.50

Total standard cost per unit $ 37.60

Version 1 39

The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $82,500 and budgeted activity of 7,500 hours.

During the year, the company completed the following transactions:

a. Purchased 57,700 pounds of raw material at a price of $8.50 per pound.

b. Used 52,750 pounds of the raw material to produce 19,500 units of work in process.

c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in

cash) worked 9,950 hours at an average cost of $20.70 per hour.

d. Applied fixed overhead to the 19,500 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 $97,100. Of this total, -$12,900 related to items such as

insurance, utilities, and indirect labor salaries that were all paid in cash and $110,000 related to

depreciation of manufacturing equipment.

e. Transferred 19,500 units from work in process to finished goods.

f. Sold for cash 20,200 units to customers at a price of $44.20 per unit.

g. Completed and transferred the standard cost associated with the 20,200 units sold from

finished goods to cost of goods sold.

h. Paid $61,000 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. Record the above transactions in the worksheet that appears below. 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).

Cash Raw Materials Work in Process Finished Goods PP&E (net) =

Materials Price Variance Materials Quantity Variance Labor Rate

Variance Labor Efficiency Variance FOH Budget Variance FOH Volume

Variance Retained Earnings

1/1 $ 1,000,000 $ 25,920 $ 0 $ 67,680 $ 750,500 = $ 0 $ 0

$ 0 $ 0 $ 0 $ 0 $ 1,844,100

a. =

b. =

c. =

d. =

e. =

Version 1 40

f. =

g. =

h. =

i. =

12/31 =

3. Determine the ending balance (e.g., 12/31 balance) in each account.

4. Prepare an income statement for the year.

24) Cleland 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 standard cost card for the

company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 1.4 gallons $ 6.00 per gallon $ 8.40

Direct labor 0.50 hours $ 19.50 per hour 9.75

Fixed manufacturing overhead 0.50 hours $ 4.50 per hour 2.25

Total standard cost per unit $ 20.40

Version 1 41

The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $56,250 and budgeted activity of 12,500 hours.

During the year, the company completed the following transactions:

a. Purchased 29,400 gallons of raw material at a price of $5.20 per gallon.

b. Used 25,520 gallons of the raw material to produce 18,300 units of work in process.

c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in

cash) worked 8,850 hours at an average cost of $19.60 per hour.

d. Applied fixed overhead to the 18,300 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 $41,650. Of this total, -$3,350 related to items such as

insurance, utilities, and indirect labor salaries that were all paid in cash and $45,000 related to

depreciation of manufacturing equipment.

e. Transferred 18,300 units from work in process to finished goods.

f. Sold for cash 20,600 units to customers at a price of $26.70 per unit.

g. Completed and transferred the standard cost associated with the 20,600 units sold from

finished goods to cost of goods sold.

h. Paid $55,000 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. 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).

Cash Raw Materials Work in Process Finished Goods PP&E (net) =

Materials Price Variance Materials Quantity Variance Labor Rate

Variance Labor Efficiency Variance FOH Budget Variance FOH Volume

Variance Retained Earnings

1/1 $ 1,010,000 $ 49,560 $ 0 $ 71,400 $ 406,400 = $ 0 $ 0

$ 0 $ 0 $ 0 $ 0 $ 1,537,360

a. =

b. =

c. =

d. =

e. =

Version 1 42

f. =

g. =

h. =

i. =

12/31 =

3. Determine the ending balance (e.g., 12/31 balance) in each account.

25) Lusher 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 standard cost card for the

company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 1.5 kilos $ 5.00 per kilo $ 7.50

Direct labor 0.70 hours $ 22.00 per hour 15.40

Fixed manufacturing overhead 0.70 hours $ 5.50 per hour 3.85

Total standard cost per unit $ 26.75

The company calculated the following variances for the year:

Materials price variance $ 30,050 U

Materials quantity variance $ 500 F

Labor rate variance $ 32,436 U

Labor efficiency variance $ 26,400 U

Fixed manufacturing overhead budget variance $ 19,500 F

Fixed manufacturing overhead volume variance $ 7,315 F

Version 1 43

The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $134,750 and budgeted activity of 24,500 hours.

During the year, the company completed the following transactions:

a.Purchased 60,100 kilos of raw material at a price of $5.50 per kilo.

b.Used 55,250 kilos of the raw material to produce 36,900 units of work in process.

c.Assigned direct labor costs to work in process. The direct labor workers (who were paid in

cash) worked 27,030 hours at an average cost of $23.20 per hour.

d.Applied fixed overhead to the 36,900 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 $115,250. Of this total, $40,250 related to items such as

insurance, utilities, and indirect labor salaries that were all paid in cash and $75,000 related to

depreciation of manufacturing equipment.

e.Transferred 36,900 units from work in process to finished goods.

f.Sold for cash 39,700 units to customers at a price of $33.60 per unit.

g.Completed and transferred the standard cost associated with the 39,700 units sold from

finished goods to cost of goods sold.

h.Paid $171,000 of selling and administrative expenses.

i.Closed all standard cost variances to cost of goods sold.

Required:

1. 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).

Cash Raw Materials Work in Process Finished Goods PP&E (net) =

Materials Price Variance Materials Quantity Variance Labor Rate

Variance Labor Efficiency Variance FOH Budget Variance FOH Volume

Variance Retained Earnings

1/1 $1,200,000 $42,000 $0 $80,250 $513,600 = $0 $0 $0 $0

$0 $0 $1,835,850

a. =

b. =

c. =

d. =

e. =

f. =

g. =

Version 1 44

h. =

i. =

12/31 =

2. Determine the ending balance (e.g., 12/31 balance) in each account.

3. Prepare an income statement for the year.

26) Gathman 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:

Gathman Corporation

Balance Sheet

January 1

Assets

Cash $ 1,000,000

Raw materials inventory 27,500

Finished goods inventory 72,485

Property, plant, and equipment (net) 784,300

Total assets $ 1,884,285

Liabilities and Equity

Retained earnings $ 1,884,285

Total liabilities and equity $ 1,884,285

The standard cost card for the company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 2.5 pounds $ 5.00 per pound $ 12.50

Direct labor 0.90 hours $ 22.00 per hour 19.80

Fixed manufacturing overhead 0.90 hours $ 6.50 per hour 5.85

Total standard cost per unit $ 38.15

Version 1 45

The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $117,000 and budgeted activity of 18,000 hours.

During the year, the company completed the following transactions:

a.Purchased 36,300 pounds of raw material at a price of $4.70 per pound.

b.Used 32,100 pounds of the raw material to produce 12,800 units of work in process.

c.Assigned direct labor costs to work in process. The direct labor workers (who were paid in

cash) worked 12,520 hours at an average cost of $21.00 per hour.

d.Applied fixed overhead to the 12,800 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 $132,700. Of this total, $27,700 related to items such as

insurance, utilities, and indirect labor salaries that were all paid in cash and $105,000 related to

depreciation of manufacturing equipment.

e.Transferred 12,800 units from work in process to finished goods.

f.Sold for cash 12,600 units to customers at a price of $52.10 per unit.

g.Completed and transferred the standard cost associated with the 12,600 units sold from

finished goods to cost of goods sold.

h.Paid $73,000 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.

Cash Raw Materials Work in Process Finished Goods PP&E (net) =

Materials Price Variance Materials Quantity Variance Labor Rate

Variance Labor Efficiency Variance FOH Budget Variance FOH Volume

Variance Retained Earnings

1/1 =

a. =

b. =

c. =

d. =

e. =

f. =

g. =

h. =

Version 1 46

i. =

12/31 =

3. Determine the ending balance (e.g., 12/31 balance) in each account.

4. Prepare an income statement for the year.

27) Pioli 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 standard cost card for the

company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 2.2 kilos $ 8.00 per kilo $ 17.60

Direct labor 0.80 hours $ 19.00 per hour 15.20

Fixed manufacturing overhead 0.80 hours $ 11.00 per hour 8.80

Total standard cost per unit $ 41.60

Version 1 47

The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $132,000 and budgeted activity of 12,000 hours.

During the year, the company completed the following transactions:

a.Purchased 22,300 kilos of raw material at a price of $7.40 per kilo.

b.Used 20,800 kilos of the raw material to produce 9,500 units of work in process.

c.Assigned direct labor costs to work in process. The direct labor workers (who were paid in

cash) worked 6,900 hours at an average cost of $19.80 per hour.

d.Applied fixed overhead to the 9,500 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 $143,000. Of this total, $60,000 related to items such as

insurance, utilities, and indirect labor salaries that were all paid in cash and $83,000 related to

depreciation of manufacturing equipment.

e.Transferred 9,500 units from work in process to finished goods.

f.Sold for cash 10,100 units to customers at a price of $54.30 per unit.

g.Completed and transferred the standard cost associated with the 10,100 units sold from

finished goods to cost of goods sold.

h.Paid $43,000 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. 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).

Cash Raw Materials Work in Process Finished Goods PP&E (net) =

Materials Price Variance Materials Quantity Variance Labor Rate

Variance Labor Efficiency Variance FOH Budget Variance FOH Volume

Variance Retained Earnings

1/1 $1,050,000 $45,760 $0 $54,080 $726,400 = $0 $0 $0 $0

$0 $0 $1,876,240

a. =

b. =

c. =

d. =

e. =

f. =

g. =

Version 1 48

h. =

i. =

12/31 =

3. Determine the ending balance (e.g., 12/31 balance) in each account.

4. Prepare an income statement for the year.

28) Milanese 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:

Milanese Corporation

Balance Sheet

January 1

Assets

Cash $ 1,090,000

Raw materials inventory 24,960

Finished goods inventory 78,280

Property, plant, and equipment (net) 652,600

Total assets $ 1,845,840

Liabilities and Equity

Retained earnings $ 1,845,840

Total liabilities and equity $ 1,845,840

The standard cost card for the company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 2.6 gallons $ 8.00 per gallon $ 20.80

Direct labor 0.60 hours $ 18.50 per hour 11.10

Fixed manufacturing overhead 0.60 hours $ 15.50 per hour 9.30

Total standard cost per unit $ 41.20

Version 1 49

The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $186,000 and budgeted activity of 12,000 hours.

During the year, the company completed the following transactions:

a.Purchased 52,400 gallons of raw material at a price of $8.90 per gallon.

b.Used 46,380 gallons of the raw material to produce 17,800 units of work in process.

c.Assigned direct labor costs to work in process. The direct labor workers (who were paid in

cash) worked 11,080 hours at an average cost of $18.90 per hour.

d.Applied fixed overhead to the 17,800 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 $197,100. Of this total, $122,100 related to items such as

insurance, utilities, and indirect labor salaries that were all paid in cash and $75,000 related to

depreciation of manufacturing equipment.

e.Transferred 17,800 units from work in process to finished goods.

f.Sold for cash 17,700 units to customers at a price of $52.30 per unit.

g.Completed and transferred the standard cost associated with the 17,700 units sold from

finished goods to cost of goods sold.

h.Paid $53,000 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.

Cash Raw Materials Work in Process Finished Goods PP&E (net) =

Materials Price Variance Materials Quantity Variance Labor Rate

Variance Labor Efficiency Variance FOH Budget Variance FOH Volume

Variance Retained Earnings

1/1 =

a. =

b. =

c. =

d. =

e. =

f. =

g. =

h. =

Version 1 50

i. =

12/31 =

3. Determine the ending balance (e.g., 12/31 balance) in each account.

29) 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:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 1.5 pounds $ 6.00 per pound $ 9.00

Direct labor 0.80 hours $ 22.00 per hour 17.60

Fixed manufacturing overhead 0.80 hours $ 5.50 per hour 4.40

Total standard cost per unit $ 31.00

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?

A) $600 in the Materials Price Variance column

B) $600 in the Materials Quantity Variance column

C) ($600) in the Materials Price Variance column

D) ($600) in the Materials Quantity Variance column

Version 1 51

30) Ferrero 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. The company has provided the following information:

Actual sales 35,800 units

Actual selling price $ 40.40 per unit

Standard cost $ 33.30 per unit

Actual selling and administrative expenses $ 121,000

The company does not have any variable manufacturing overhead costs and it recorded the

following variances during the year:

Materials price variance $ 76,960 F

Materials quantity variance $ 600 U

Labor rate variance $ 21,776 F

Labor efficiency variance $ 28,800 U

Fixed manufacturing overhead budget variance $ 15,000 F

Fixed manufacturing overhead volume variance $ 41,580 F

When the company closes its standard cost variances, the Cost of Goods Sold will increase

(decrease) by:

A) $56,580

B) ($125,916)

C) ($56,580)

D) $125,916

31) Bialas 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 1.6 liters per unit at $7.00 per liter or

$11.20 per unit. During the year, the company purchased 36,400 liters of raw material at a price

of $7.40 per liter and used 32,060 liters of the raw material to produce 20,100 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 purchase of raw materials is recorded, which of the following entries will be made?

Version 1 52

A) ($14,560) in the Materials Quantity Variance column

B) ($14,560) in the Materials Price Variance column

C) $14,560 in the Materials Price Variance column

D) $14,560 in the Materials Quantity Variance column

32) Sousa 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 2.8 kilos per unit at $7.50 per kilo or

$21.00 per unit. During the year, the company purchased 82,100 kilos of raw material at a price

of $7.40 per kilo and used 78,020 kilos of the raw material to produce 27,900 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?

A) $750 in the Materials Quantity Variance column

B) $750 in the Materials Price Variance column

C) ($750) in the Materials Quantity Variance column

D) ($750) in the Materials Price Variance column

33) Isenberg 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. The company does not have any variable manufacturing overhead costs. It recorded

the following variances during the year:

Materials price variance $ 90,320 U

Materials quantity variance $ 500 F

Labor rate variance $ 4,365 F

Labor efficiency variance $ 16,000 U

Fixed manufacturing overhead budget variance $ 10,500 U

Fixed manufacturing overhead volume variance $ 15,000 F

Version 1 53

When the company closes its standard cost variances, the Cost of Goods Sold will increase

(decrease) by:

A) ($4,500)

B) $4,500

C) $96,955

D) ($96,955)

34) Dalgleish 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 standard cost card for the

company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 3.6 pounds $ 9.50 per pound $ 34.20

Direct labor 0.70 hours $ 20.00 per hour 14.00

Fixed manufacturing overhead 0.70 hours $ 20.50 per hour 14.35

Total standard cost per unit $ 62.55

The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $358,750 and budgeted activity of 17,500 hours. During the year, 32,900 units were

started and completed. Actual fixed overhead costs for the year were $347,350.

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?

A) ($113,365) in the FOH Budget Variance column

B) ($113,365) in the FOH Volume Variance column

C) $113,365 in the FOH Budget Variance column

D) $113,365 in the FOH Volume Variance column

Version 1 54

35) 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?

A) $108,855 in the FOH Volume Variance column

B) ($108,855) in the FOH Budget Variance column

C) $108,855 in the FOH Budget Variance column

D) ($108,855) in the FOH Volume Variance column

36) Platko 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 standard cost card for the

company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 3.6 gallons $ 7.00 per gallon $ 25.20

Direct labor 0.80 hours $ 22.00 per hour 17.60

Fixed manufacturing overhead 0.80 hours $ 14.50 per hour 11.60

Total standard cost per unit $ 54.40

Version 1 55

The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $348,000 and budgeted activity of 24,000 hours. During the year, 38,900 units were

started and completed. Actual fixed overhead costs for the year were $335,900.

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?

A) $12,100 in the FOH Volume Variance column

B) ($12,100) in the FOH Volume Variance column

C) $12,100 in the FOH Budget Variance column

D) ($12,100) in the FOH Budget Variance column

37) Ladue 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 3.6 kilos per unit at $7.00 per kilo.

During the year, the company purchased 67,600 kilos of raw material at a price of $6.40 per kilo

and used 60,220 kilos of the raw material to produce 16,700 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 used in production, the Work in Process inventory account

will increase (decrease) by:

A) $421,540

B) ($421,540)

C) $420,840

D) ($420,840)

Version 1 56

38) Loos 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 direct labor

standards for the company’s only product specify 0.90 hours per unit at $21.50 per hour. During

the year, the company started and completed 26,800 units. Direct labor employees worked

25,220 hours at an average cost of $22.50 per hour.

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

A) ($25,220) in the Labor Rate Variance column

B) $25,220 in the Labor Rate Variance column

C) $25,220 in the Labor Efficiency Variance column

D) ($25,220) in the Labor Efficiency Variance column

39) Newbery 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 0.60 hours per unit at $9.50 per hour. The

standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $199,500 and budgeted activity of 21,000 hours. During the year, 44,000 units were

started and completed. Actual fixed overhead costs for the year were $216,200.

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?

A) ($16,700) in the FOH Budget Variance column

B) ($16,700) in the FOH Volume Variance column

C) $16,700 in the FOH Volume Variance column

D) $16,700 in the FOH Budget Variance column

Version 1 57

40) 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:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 3.4 pounds $ 8.00 per pound $ 27.20

Direct labor 0.70 hours $ 21.00 per hour 14.70

Fixed manufacturing overhead 0.70 hours $ 13.50 per hour 9.45

Total standard cost per unit $ 51.35

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

41) Karim 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:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 1.5 gallons $ 9.00 per gallon $ 13.50

Direct labor 0.70 hours $ 21.50 per hour 15.05

Fixed manufacturing overhead 0.70 hours $ 9.00 per hour 6.30

Total standard cost per unit $ 34.85

Version 1 58

During the year, the company started and completed 31,500 units. Direct labor employees

worked 23,650 hours at an average cost of $19.50 per hour.

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 direct labor costs, the Work in Process inventory account will increase

(decrease) by:

A) $474,075

B) ($474,075)

C) ($461,175)

D) $461,175

42) Ciresi 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. The company has provided the following information:

Actual sales 19,900 units

Standard cost $ 36.70 per unit

The company does not have any variable manufacturing overhead costs and it recorded the

following variances during the year:

Materials price variance $ 32,820 F

Materials quantity variance $ 500 F

Labor rate variance $ 25,872 F

Labor efficiency variance $ 33,000 F

Fixed manufacturing overhead budget variance $ 16,500 F

Fixed manufacturing overhead volume variance $ 38,880 F

The adjusted Cost of Goods Sold after closing all of the variances to Cost of Goods Sold will be

closest to:

A) $1,066,952

B) $877,902

C) $730,330

D) $582,758

Version 1 59

43) Shankland 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 standard cost card for the

company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 1.5 pounds $ 8.50 per pound $ 12.75

Direct labor 0.50 hours $ 18.00 per hour 9.00

Fixed manufacturing overhead 0.50 hours $ 9.00 per hour 4.50

Total standard cost per unit $ 26.25

The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $67,500 and budgeted activity of 7,500 hours. During the year, 24,600 units were

started and completed. Actual fixed overhead costs for the year were $84,800.

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 applying fixed manufacturing overhead to production, the Work in Process inventory

account will increase (decrease) by:

A) $110,700

B) ($6,800)

C) ($110,700)

D) $6,800

44) Lemke 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:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 1.7 pounds $ 7.00 per pound $ 11.90

Direct labor 0.80 hours $ 20.50 per hour 16.40

Fixed manufacturing overhead 0.80 hours $ 6.50 per hour 5.20

Total standard cost per unit $ 33.50

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During the year, the company started and completed 12,300 units. Direct labor employees

worked 10,540 hours at an average cost of $22.40 per hour.

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

A) $20,026 in the Labor Efficiency Variance column

B) $20,026 in the Labor Rate Variance column

C) ($20,026) in the Labor Rate Variance column

D) ($20,026) in the Labor Efficiency Variance column

45) Scogin 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:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 3.7 pounds $ 9.00 per pound $ 33.30

Direct labor 0.60 hours $ 18.00 per hour 10.80

Fixed manufacturing overhead 0.60 hours $ 17.50 per hour 10.50

Total standard cost per unit $ 54.60

During the year, the company purchased 76,500 pounds of raw material at a price of $8.70 per

pound and used 71,880 pounds of the raw material to produce 19,400 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 Work in Process inventory account

will increase (decrease) by:

A) ($646,020)

B) $646,020

C) ($646,920)

D) $646,920

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46) Sobus 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 0.70 hours per unit at $4.00 per hour. The

standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $70,000 and budgeted activity of 17,500 hours. During the year, 19,700 units were

started and completed. Actual fixed overhead costs for the year were $57,700.

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 applying fixed manufacturing overhead to production, the Work in Process inventory

account will increase (decrease) by:

A) $55,160

B) ($26,300)

C) $26,300

D) ($55,160)

47) Lisser 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 liters per unit at $7.50 per liter or

$20.25 per unit. During the year, the company purchased 67,300 liters of raw material at a price

of $8.00 per liter and used 61,660 liters of the raw material to produce 22,800 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:

A) ($493,280)

B) $493,280

C) $462,450

D) ($462,450)

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48) 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:

A) ($368,480)

B) $376,000

C) ($376,000)

D) $368,480

49) Dougher 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:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 1.1 gallons $ 8.50 per gallon $ 9.35

Direct labor 0.50 hours $ 18.50 per hour 9.25

Fixed manufacturing overhead 0.50 hours $ 6.50 per hour 3.25

Total standard cost per unit $ 21.85

During the year, the company started and completed 26,900 units. Direct labor employees

worked 14,250 hours at an average cost of $20.20 per hour.

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

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A) ($14,800) in the Labor Efficiency Variance column

B) $14,800 in the Labor Rate Variance column

C) ($14,800) in the Labor Rate Variance column

D) $14,800 in the Labor Efficiency Variance column

50) Signore 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:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 1.5 gallons $ 9.00 per gallon $ 13.50

Direct labor 0.50 hours $ 21.50 per hour 10.75

Fixed manufacturing overhead 0.50 hours $ 8.00 per hour 4.00

Total standard cost per unit $ 28.25

During the year, the company purchased 34,600 gallons of raw material at a price of $9.10 per

gallon and used 30,050 gallons of the raw material to produce 20,100 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 purchase of raw materials is recorded, which of the following entries will be made?

A) $3,460 in the Materials Quantity Variance column

B) ($3,460) in the Materials Price Variance column

C) $3,460 in the Materials Price Variance column

D) ($3,460) in the Materials Quantity Variance column

51) Gersbach 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. The company has provided the following information:

Actual sales 22,800 units

Actual selling price $ 38.00 per unit

Standard cost $ 29.00 per unit

Actual selling and administrative expenses $ 135,000

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The company does not have any variable manufacturing overhead costs and it recorded the

following variances during the year:

Materials price variance $ 23,220 U

Materials quantity variance $ 550 F

Labor rate variance $ 14,584 U

Labor efficiency variance $ 8,800 F

Fixed manufacturing overhead budget variance $ 14,800 U

Fixed manufacturing overhead volume variance $ 29,295 U

The net operating income for the year is closest to:

A) ($2,349)

B) $85,915

C) $70,200

D) $145,368

52) Mccreary 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. The standard cost of the company’s product is $28.00 per unit. During the year the

company sold 27,500 units at $36.30 per unit. The actual selling and administrative expenses

were $121,000 for the year. The company does not have any variable manufacturing overhead

costs and it recorded the following variances during the year:

Materials price variance $ 27,090 U

Materials quantity variance $ 800 U

Labor rate variance $ 10,128 U

Labor efficiency variance $ 40,700 U

Fixed manufacturing overhead budget variance $ 12,700 F

Fixed manufacturing overhead volume variance $ 14,040 F

The net operating income for the year is closest to:

A) $107,250

B) $55,272

C) $118,446

D) $79,816

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53) Kellems 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. The company has provided the following information:

Actual sales 17,100 units

Actual selling price $ 26.60 per unit

Standard cost $ 21.20 per unit

Actual selling and administrative expenses $ 60,000

The company does not have any variable manufacturing overhead costs and it recorded the

following variances during the year:

Materials price variance $ 2,340 F

Materials quantity variance $ 500 U

Labor rate variance $ 942 F

Labor efficiency variance $ 6,300 F

Fixed manufacturing overhead budget variance $ 16,600 F

Fixed manufacturing overhead volume variance $ 7,980 U

The adjusted Cost of Goods Sold after closing all of the variances to Cost of Goods Sold will be

closest to:

A) $380,222

B) $344,818

C) $362,520

D) $472,562

54) Isaman 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 direct labor

standards for the company’s only product specify 0.60 hours per unit at $21.50 per hour. During

the year, the company started and completed 11,500 units. Direct labor employees worked 7,500

hours at an average cost of $19.50 per hour.

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

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A) ($12,900) in the Labor Rate Variance column

B) $12,900 in the Labor Efficiency Variance column

C) $12,900 in the Labor Rate Variance column

D) ($12,900) in the Labor Efficiency Variance column

55) 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:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 3.4 gallons $ 6.00 per gallon $ 20.40

Direct labor 0.70 hours $ 19.50 per hour 13.65

Fixed manufacturing overhead 0.70 hours $ 14.00 per hour 9.80

Total standard cost per unit $ 43.85

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:

A) ($375,960)

B) $375,960

C) ($338,364)

D) $338,364

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56) Rhudy 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 direct labor

standards for the company’s only product specify 0.60 hours per unit at $20.00 per hour. During

the year, the company started and completed 20,700 units. Direct labor employees worked

12,120 hours at an average cost of $18.90 per hour.

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 direct labor costs, the Work in Process inventory account will increase

(decrease) by:

A) ($229,068)

B) ($248,400)

C) $229,068

D) $248,400

57) Phann 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 standard cost card for the

company’s only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard

Cost

Direct materials 2.8 kilos $ 8.50 per kilo $ 23.80

Direct labor 0.50 hours $ 22.00 per hour 11.00

Fixed manufacturing overhead 0.50 hours $ 12.00 per hour 6.00

Total standard cost per unit $ 40.80

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The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing

overhead of $90,000 and budgeted activity of 7,500 hours.

During the year, the company completed the following transactions:

a. Purchased 59,000 kilos of raw material at a price of $9.20 per kilo.

b. Used 51,340 kilos of the raw material to produce 18,300 units of work in process.

c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in

cash) worked 8,850 hours at an average cost of $23.70 per hour.

d. Applied fixed overhead to the 18,300 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 $79,400. Of this total, $22,400 related to items such as

insurance, utilities, and indirect labor salaries that were all paid in cash and $57,000 related to

depreciation of manufacturing equipment.

e. Completed and transferred 18,300 units from work in process to finished goods.

Assume that all transactions are recorded on the below worksheet, which is similar to the

worksheet shown in your text except that it has been divided into two parts so that it fits on one

page. The beginning balances in each of the accounts have been given. PP&E (net) stands for

Property, Plant, and Equipment net of depreciation.

Cash Raw Materials Work in Process Finished Goods PP&E (net) =

Materials Price Variance Materials Quantity Variance Labor Rate

Variance Labor Efficiency Variance FOH Budget Variance FOH Volume

Variance Retained Earnings

1/1 $ 1,070,000 $ 28,560 $ 0 $ 61,200 $ 523,500 = $ 0 $ 0

$ 0 $ 0 $ 0 $ 0 $ 1,683,260

a. =

b. =

c. =

d. =

e.

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

increase (decrease) by:

A) ($501,500)

B) $501,500

C) $542,800

D) ($542,800)

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58) Phann Corporation manufactures one product. It does not maintain any beginning or