20) 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
$
11.90
Direct labor
0.80
hours
$
20.50
16.40
Fixed manufacturing overhead
0.80
hours
$
6.50
5.20
Total standard cost per unit
$
33.50
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
21) 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
$
33.30
Direct labor
0.60
hours
$
18.00
10.80
Fixed manufacturing overhead
0.60
hours
$
17.50
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
22) 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)
23) 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)
24) 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
25) 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
pounds
$
8.50
per pound
$
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?
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
27
26) 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
$
13.50
Direct labor
0.50
hours
$
21.50
10.75
Fixed manufacturing overhead
0.50
hours
$
8.00
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
27) Gersbach Corporation manufactures one product. It does not maintain any beginning or ending
28
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
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
30
28) 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
32
29) 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
30) 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?
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
31) 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 gallons
$
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
32) 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
37
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
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)
1/1
$1,070,000
$28,560
$0
$61,200
$523,500
=
a.
=
b.
=
c.
=
d.
=
e.
=
Materials
Price
Variance
Materials
Quantity
Variance
Labor Rate
Variance
Labor
Efficiency
Variance
FOH
Budget
Variance
FOH
Volume
Variance
Retained
Earnings
1/1
$0
$0
$0
$0
$0
$0
$1,683,260
a.
b.
c.
d.
e.
33) 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)
34) When recording the raw materials purchases in transaction (a) above, the Raw Materials
inventory account will increase (decrease) by:
A) $501,500
B) $542,800
C) ($501,500)
D) ($542,800)
35) When recording the raw materials used in production in transaction (b) above, the Work in
Process inventory account will increase (decrease) by:
A) $436,390
B) ($436,390)
C) ($435,540)
D) $435,540
36) When recording the raw materials used in production in transaction (b) above, the Raw
Materials inventory account will increase (decrease) by:
A) ($436,390)
B) ($472,328)
C) $472,328
D) $436,390
37) When recording the direct labor costs in transaction (c) above, the Cash account will increase
(decrease) by:
A) ($201,300)
B) $201,300
C) ($209,745)
D) $209,745