Bowen Company manufactures one product, it does not maintain any beginning or en

Question

Bowen Company manufactures one product, it does not maintain any beginning or ending inventories, and its uses a standard cost system. Its predetermined overhead rate includes $1,000,000 of fixed overhead in the numerator and 50,000 direct labor-hours in the denominator. The company purchased (with cash) and used 48,000 yards of raw materials at a cost of $11.10 per yard. Its direct laborers worked 20,650 hours and were paid a total of $291,300. The company started and completed 9,400 units of finished goods during the period. Bowen's standard cost card for its only product is as follows Standard Quantity or Standard Price or Rate Standard Cost Inputs Direct materials Direct labor Fixed manufacturing overhead Hours 4.3 yards 16.50 per yard 70.95 51.80 74.00 $196.75 3.7 hours $14.00 per hour .7 hours $20.00 per hour Total standard cost per unit 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? b. The Cash will increase (decrease) by how much? 4. When applying fixed manufacturing overhead to production, the Work in Process inventory will increase (decrease) by how much? 5. When transferring manufacturing costs from Work in Process to Finished Goods, the Finished Goods inventory will increase (decrease) by how much? 1a. The raw materials will 1b. The cash will 2a. The raw materials will 2b. The work in process will 3a. The work 3b. The cash will 4. The work in process will 5The finished goods will by by by by by by by by in process will

Explanation / Answer

Answer: Reason 1a. The raw materials will Increase by $               532,800.00 As we have paid cash and received raw material raw material will increase 1b. The cash will Decrease by $               532,800.00 As we have paid cash it will decrease 2a. The raw materials will Decrease by $               532,800.00 As we have transferred raw material to work in process it will decrease 2b. The work in process will Increase by $               532,800.00 As we have transferred raw material to work in process, the work in process will increase 3a. The work in process will Increase by $               291,300.00 As we have transferred direct labour to work in process, the work in process will increase 3b. The cash will Decrease by $               291,300.00 As we have paid cash it will decrease 4 The work in process will Increase by $               413,000.00 ($1,000,000/50,000*20650) 5 The finished goods will Increase by $           1,237,100.00 ($532,800+291,300+413,000)

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