system. denominator. The company purchased (with cash) and used 46,000 yards of
ID: 2406350 • Letter: S
Question
system. denominator. The company purchased (with cash) and used 46,000 yards of raw materials at a cost of $11.20 per yard. Its direct Company manufactures one product, It does not maintain any beginning or ending inventories, and its uses a standard cost Its predetermined overhead rate includes $1,000,000 of fixed overhead in the numerator and 50,000 direct labor-hours in the worked 20,700 hours and were paid a total of $291,400. The company started and completed 9,500 units of finished goods during the period. Bowen's standard cost card for its only product is as follows: Standard Standard Cost Standard Quantity or Direct materials Direct labor Fixed manufacturing overheard Total standard cost per unit 4.4 yards $17.0e per yard 74.88 3.8 hours $14.00 per hour 3.8 hours $20.00 per hour76.60 53.20 $284.80 Required 1. When recording the raw material purchases a. The Raw Materials inventory will increase (decrease) by how much? b. The Cash will increase (decrease) by how much? 2. When recording the raw materials used in production a. The Raw Materials inventory will increase (decrease) by how much? b. The Work in Process inventory will increase (decrease) by how much? 3. When recording the direct labor costs added to production a. The Work in Process inventory will increase (decrease) by how much? Prey 1of 3 Next>Explanation / Answer
SOLUTION
1. When recording the raw material purchases:
A. Raw Materials inventory will increase by $782,000 (being the standard cost of 46,000 * $17.00)
B. Cash will decrease by $515,200 (being the actual cost paid for 46,000 * $11.20)
2. When recording the raw materials used in production:
A. Raw Materials inventory will decrease by $782,000 (being the standard cost of 46,000 * $17.00)
B. Work in Process inventory will increase by $710,600 (being the standard cost of 9,500 units at 4.4 yard per unit - 41,800 * $17.00)
3. When recording the direct labor costs added to production:
A. Work in Process inventory will increase by $505,400 (being the standard cost of 9,500 units at 3.8 hours per unit - 36,100 * $14)
B. Cash will decrease by $291,400 (being the actual cost of 20,700 hours for $291,400)
4. Work in Process inventory will increase by $414,000
Predetermined overhead rate = Budgeted overhead / Budgeted labor hours
= $1,000,000 / 50,000 = $20 per labor hour
Overhead applied = Actual labor hours * Predetermined overhead rate
= 20,700 * $20 = $414,000
5. Finished Goods inventory will increase by $1,938,000 (being units transferred * standard costing per unit = 9,500 * $204)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.