61
To answer the following questions, it would be advisable to record transactions a through i in the
worksheet below. This worksheet is similar to the worksheets in your text except that it has been
split into two parts to fit on the page. PP&E (net) stands for Property, Plant, and Equipment net of
depreciation.
Cash
Raw Materials
Work in
Process
Finished
Goods
PP&E (net)
1/1
$1,020,000
$57,120
$0
$63,660
$722,100
=
a.
=
b.
=
c.
=
d.
=
e.
=
f.
g.
h.
i.
Materials
Price
Variance
Materials
Quantity
Variance
Labor Rate
Variance
Labor
Efficiency
Variance
FOH
Budget
Variance
FOH
Volume
Variance
1/1
$0
$0
$0
$0
$0
$0
a.
b.
c.
d.
e.
f.
g.
h.
i.
59) When the company closes its standard cost variances, the Cost of Goods Sold will increase
(decrease) by:
A) ($90,070)
B) $154,489
C) $90,070
D) ($154,489)
60) The adjusted Cost of Goods Sold after closing all of the variances to Cost of Goods Sold will
be closest to:
A) $784,496
B) $1,160,621
C) $938,985
D) $1,093,474
61) The net operating income for the year is closest to:
A) $45,952
B) $128,636
C) $226,034
D) $283,125
65
Samples 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
liters
$
8.50
per liter
$
11.90
Direct labor
0.80
hours
$
18.00
per hour
14.40
Fixed manufacturing overhead
0.80
hours
$
7.00
per hour
5.60
Total standard cost per unit
$
31.90
The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing
overhead of $140,000 and budgeted activity of 20,000 hours.
During the year, the company completed the following transactions:
a. Purchased 49,500 liters of raw material at a price of $8.00 per liter. The materials price
variance was $24,750 F.
b. Used 45,820 liters of the raw material to produce 32,800 units of work in process. The
materials quantity variance was $850 F.
c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in
cash) worked 28,440 hours at an average cost of $17.00 per hour. The direct labor rate variance
was $28,440 F. The labor efficiency variance was $39,600 U.
d. Applied fixed overhead to the 32,800 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 $154,700. Of this total, $83,700 related to items such as
insurance, utilities, and indirect labor salaries that were all paid in cash and $71,000 related to
depreciation of manufacturing equipment. The fixed manufacturing overhead budget variance was
$14,700 U. The fixed manufacturing overhead volume variance was $43,680 F.
e. Completed and transferred 32,800 units from work in process to finished goods.
f. Sold (for cash) 32,000 units to customers at a price of $38.20 per unit.
g. Transferred the standard cost associated with the 32,000 units sold from finished goods to cost
of goods sold.
h. Paid $133,000 of selling and administrative expenses.
i. Closed all standard cost variances to cost of goods sold.
66
To answer the following questions, it would be advisable to record transactions a through i in the
worksheet below. This worksheet is similar to the worksheets in your text except that it has been
split into two parts to fit on the page. PP&E (net) stands for Property, Plant, and Equipment net of
depreciation.
Cash
Raw Materials
Work in
Process
Finished
Goods
PP&E (net)
1/1
$1,060,000
$22,610
$0
$89,320
$508,000
=
a.
=
b.
=
c.
=
d.
=
e.
=
f.
g.
h.
i.
Materials
Price
Variance
Materials
Quantity
Variance
Labor Rate
Variance
Labor
Efficiency
Variance
FOH
Budget
Variance
FOH
Volume
Variance
1/1
$0
$0
$0
$0
$0
$0
a.
b.
c.
d.
e.
f.
g.
h.
i.
62) When the company closes its standard cost variances, the Cost of Goods Sold will increase
(decrease) by:
A) $43,420
B) ($28,980)
C) $28,980
D) ($43,420)
63) The adjusted Cost of Goods Sold after closing all of the variances to Cost of Goods Sold will
be closest to:
A) $977,380
B) $1,020,800
C) $1,265,820
D) $1,064,220
64) The net operating income for the year is closest to:
A) $155,660
B) $178,434
C) $68,600
D) $112,020
70
Mangrum 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. Information concerning the direct labor standards for the
company’s only product is as follows:
Inputs
Standard
Quantity
or Hours
Standard Price or Rate
Standard
Cost
Direct labor
0.70
hours
$
21.50
per hour
$
15.05
During the year, the company assigned direct labor costs to work in process. The direct labor
workers (who were paid in cash) worked 12,790 hours at an average cost of $19.50 per hour. The
company calculated the following direct labor variances for the year:
Labor rate variance
$
25,580
F
Labor efficiency variance
$
6,450
F
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)
1/1
$1,130,000
$23,940
$0
$87,870
$526,400
=
Materials
Price
Variance
Materials
Quantity
Variance
Labor Rate
Variance
Labor
Efficiency
Variance
FOH
Budget
Variance
FOH
Volume
Variance
1/1
$0
$0
$0
$0
$0
$0
65) When recording the direct labor costs, the Cash account will increase (decrease) by:
A) ($249,405)
B) $281,435
C) ($281,435)
D) $249,405
66) When recording the direct labor costs, the Work in Process inventory account will increase
(decrease) by:
A) ($249,405)
B) $249,405
C) ($281,435)
D) $281,435
67) When the direct labor cost is recorded, which of the following entries will be made?
A) ($6,450) in the Labor Efficiency Variance column
B) $6,450 in the Labor Efficiency Variance column
C) ($6,450) in the Labor Rate Variance column
D) $6,450 in the Labor Rate Variance column
68) When the direct labor cost is recorded, which of the following entries will be made?
A) $25,580 in the Labor Rate Variance column
B) ($25,580) in the Labor Rate Variance column
C) ($25,580) in the Labor Efficiency Variance column
D) $25,580 in the Labor Efficiency Variance column
73
Robnett 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. 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
3.8
liters
$
6.50
per liter
$
24.70
Direct labor
0.60
hours
$
18.00
per hour
10.80
Fixed manufacturing overhead
0.60
hours
$
18.50
per hour
11.10
Total standard cost per unit
$
46.60
During the year, the company completed the following transactions:
a. Purchased 106,900 liters of raw material at a price of $6.80 per liter.
b. Used 93,760 liters of the raw material to produce 24,700 units of work in process.
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)
1/1
$1,110,000
$54,340
$0
$60,580
$616,800
=
a.
=
b.
=
Materials
Price
Variance
Materials
Quantity
Variance
Labor Rate
Variance
Labor
Efficiency
Variance
FOH
Budget
Variance
FOH
Volume
Variance
1/1
$0
$0
$0
$0
$0
$0
a.
b.
69) When recording the raw materials purchases in transaction (a) above, the Cash account will
increase (decrease) by:
A) $726,920
B) ($694,850)
C) ($726,920)
D) $694,850
70) When recording the raw materials purchases in transaction (a) above, the Raw Materials
inventory account will increase (decrease) by:
A) $726,920
B) ($694,850)
C) ($726,920)
D) $694,850
71) When the purchase of raw materials is recorded in transaction (a) above, which of the
following entries will be made?
A) $32,070 in the Materials Price Variance column
B) ($32,070) in the Materials Quantity Variance column
C) $32,070 in the Materials Quantity Variance column
D) ($32,070) in the Materials Price Variance column
72) When recording the raw materials used in production in transaction (b) above, the Raw
Materials inventory account will increase (decrease) by:
A) $609,440
B) $637,568
C) ($637,568)
D) ($609,440)
73) When the raw materials used in production are recorded in transaction (b) above, which of the
following entries will be made?
A) $650 in the Materials Quantity Variance column
B) ($650) in the Materials Price Variance column
C) ($650) in the Materials Quantity Variance column
D) $650 in the Materials Price Variance column
77
Robins 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
3.8
pounds
$
9.50
per pounds
$
36.10
Direct labor
0.80
hours
$
18.50
per hour
14.80
Fixed manufacturing overhead
0.80
hours
$
18.00
per hour
14.40
Total standard cost per unit
$
65.30
The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing
overhead of $360,000 and budgeted activity of 20,000 hours.
During the year, the company completed the following transactions:
a. Purchased 134,700 pounds of raw material at a price of $9.10 per pound.
b. Used 122,080 pounds of the raw material to produce 32,100 units of work in process.
c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in
cash) worked 26,680 hours at an average cost of $17.20 per hour.
d. Applied fixed overhead to the 32,100 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 $378,400. Of this total, $297,400 related to items such as
insurance, utilities, and indirect labor salaries that were all paid in cash and $81,000 related to
depreciation of manufacturing equipment.
e. Completed and transferred 32,100 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)
1/1
$1,000,000
$28,880
$0
$84,890
$566,900
=
a.
=
b.
=
c.
=
d.
=
e.
=
Materials
Price
Variance
Materials
Quantity
Variance
Labor Rate
Variance
Labor
Efficiency
Variance
FOH
Budget
Variance
FOH
Volume
Variance
1/1
$0
$0
$0
$0
$0
$0
a.
b.
c.
d.
e.
74) When recording the raw materials purchases in transaction (a) above, the Raw Materials
inventory account will increase (decrease) by:
A) $1,279,650
B) ($1,279,650)
C) ($1,225,770)
D) $1,225,770
75) When recording the raw materials purchases in transaction (a) above, the Cash account will
increase (decrease) by:
A) ($1,279,650)
B) ($1,225,770)
C) $1,279,650
D) $1,225,770
76) When recording the raw materials used in production in transaction (b) above, the Raw
Materials inventory account will increase (decrease) by:
A) ($1,110,928)
B) $1,159,760
C) $1,110,928
D) ($1,159,760)
77) When recording the raw materials used in production in transaction (b) above, the Work in
Process inventory account will increase (decrease) by:
A) ($1,158,810)
B) $1,158,810
C) ($1,159,760)
D) $1,159,760
78) When recording the direct labor costs in transaction (c) above, the Work in Process inventory
account will increase (decrease) by:
A) $458,896
B) $475,080
C) ($475,080)
D) ($458,896)