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

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Question 61

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

A) ($92,590)
B) ($108,350)
C) $108,350
D) $92,590

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

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Question 62

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The ending balance in the Finished Goods account will be closest to:

A) $865,815
B) $830,505
C) $76,830
D) $65,010

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

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Question 63

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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: 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:

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

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

The net operating income for the year is closest to:

In the Excel spreadsheet approach in Appendix 9B in the text, each variance has its own clearing account that appears on the right-hand side of the "=" sign.This enables us to record all favorable variances as increases to their respective clearing accounts and all unfavorable variances as decreases to their accounts.

When the purchase of raw materials is recorded in transaction (a) above, which of the following entries will be made?

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

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: The standard cost card for the company's only product is as follows: The company calculated the following variances for the year: 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.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. 2.Determine the ending balance (e.g., 12/31 balance)in each account. 3.Prepare an income statement for the year.

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: 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.Because of the width of the worksheet, it is in two parts.In your text, these two parts would be joined side-by-side to make one very wide worksheet.The beginning balances have been provided for each of the accounts, including the Property, Plant, and Equipment (net)account which is abbreviated as PP&E (net).

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

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

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: 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). 3.Determine the ending balance (e.g., 12/31 balance)in each account. 4.Prepare an income statement for the year.

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: 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?

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

When the direct labor cost is recorded in transaction (c) above, which of the following entries will be made?

When the purchase of raw materials is recorded in transaction (a) above, which of the following entries will be made?

The net operating income for the year is closest to:

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: 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: