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

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Question 31

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

A) ($147,700)
B) ($145,920)
C) $147,700
D) $145,920

E) A) and B)
F) A) and C)

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Question 32

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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: 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.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).

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Labor rate variance = AH × (AR - SR)
= 1...

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Question 33

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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: The company calculated the following variances for the year: 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). 2.Determine the ending balance (e.g., 12/31 balance)in each account. 3.Prepare an income statement for the year.

When recording the direct labor costs, the Work in Process inventory account will increase (decrease) by:

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

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

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: 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.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.

When Raw Materials, Work in Process, and Finished Goods are recorded and carried at their standard cost, the actual prices paid for inputs and the actual quantities of inputs that are used in production affect the costs recorded in the inventory accounts.

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

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

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

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: 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?

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

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

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

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

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

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: 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?

The ending balance in the PP&E (net) account will be closest to:

The ending balance in the Retained Earnings account at the end of the year is closest to: