Exam 25: Standard Cost Systems: a Financial Reporting Perspective Using Microsoft Excel

Arena 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 $81,000 and budgeted activity of 18,000 hours. During the year, the company completed the following transactions: a. Purchased 35,400 pounds of raw material at a price of $4.60 per pound. b. Used 32,180 pounds of the raw material to produce 26,900 units of work in process. c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 23,810 hours at an average cost of $20.60 per hour. d. Applied fixed overhead to the 26,900 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 $67,800. Of this total, $3,800 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $64,000 related to depreciation of manufacturing equipment. e. Completed and transferred 26,900 units from work in process to finished goods. f. Sold (for cash) 27,100 units to customers at a price of $36.60 per unit. g. Transferred the standard cost associated with the 27,100 units sold from finished goods to cost of goods sold. h. Paid $149,000 of selling and administrative expenses. i. Closed all standard cost variances to cost of goods sold. The company calculated the following variances for the year: To answer the following questions, you will need to record transactions a through i in the worksheet below. This worksheet is similar to the worksheets in your text except that it has been split into two parts to fit on the page. PP&E (net) stands for Property, Plant, and Equipment net of depreciation. -The ending balance in the PP&E (net)account will be closest to:

Arena 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 $81,000 and budgeted activity of 18,000 hours. During the year, the company completed the following transactions: a. Purchased 35,400 pounds of raw material at a price of $4.60 per pound. b. Used 32,180 pounds of the raw material to produce 26,900 units of work in process. c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 23,810 hours at an average cost of $20.60 per hour. d. Applied fixed overhead to the 26,900 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 $67,800. Of this total, $3,800 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $64,000 related to depreciation of manufacturing equipment. e. Completed and transferred 26,900 units from work in process to finished goods. f. Sold (for cash) 27,100 units to customers at a price of $36.60 per unit. g. Transferred the standard cost associated with the 27,100 units sold from finished goods to cost of goods sold. h. Paid $149,000 of selling and administrative expenses. i. Closed all standard cost variances to cost of goods sold. The company calculated the following variances for the year: To answer the following questions, you will need to record transactions a through i in the worksheet below. This worksheet is similar to the worksheets in your text except that it has been split into two parts to fit on the page. PP&E (net) stands for Property, Plant, and Equipment net of depreciation. -The ending balance in the Retained Earnings account at the end of the year is closest to:

Lakatos 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. There is no variable manufacturing overhead. The standard cost card for the company's only product contains the following information concerning direct materials: During the year, the company completed the following transactions concerning direct materials: a. Purchased 151,800 kilos of raw material at a price of $9.70 per kilo. b. Used 140,870 kilos of the raw material to produce 38,100 units of work in process. The company calculated the following direct materials variances for the year: 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. -When recording the raw materials used in production in transaction (b)above,the Work in Process inventory account will increase (decrease)by:

Decena 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. Information concerning the direct labor standards for the company's only product is as follows: During the year, the company assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 15,830 hours at an average cost of $18.50 per hour. The company calculated the following direct labor variances for the year: 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. -When recording the direct labor costs,the Cash account will increase (decrease)by:

Kita 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. There is no variable manufacturing overhead. The standard cost card for the company's only product is as follows: During the year, the company assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 24,820 hours at an average cost of $21.20 per hour. 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. -When the direct labor cost is recorded in transaction (c)above,which of the following entries will be made?

Robins 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 $360,000 and budgeted activity of 20,000 hours. During the year, the company completed the following transactions: a. Purchased 134,700 pounds of raw material at a price of $9.10 per pound. b. Used 122,080 pounds of the raw material to produce 32,100 units of work in process. c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 26,680 hours at an average cost of $17.20 per hour. d. Applied fixed overhead to the 32,100 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 $378,400. Of this total, $297,400 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $81,000 related to depreciation of manufacturing equipment. e. Completed and transferred 32,100 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. -When recording the raw materials purchases in transaction (a)above,the Raw Materials inventory account will increase (decrease)by:

Bohon 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. There is no variable manufacturing overhead. The standard cost card for the company's only product contains the following information concerning direct materials: During the year, the company completed the following transactions concerning direct materials: a. Purchased 19,700 pounds of raw material at a price of $4.70 per pound. b. Used 18,500 pounds of the raw material to produce 18,400 units of work in process. The company calculated the following direct materials variances for the year: 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. -When recording the raw materials used in production in transaction (b)above,the Raw Materials inventory account will increase (decrease)by:

In the Excel spreadsheet approach in Appendix 10B 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.

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?

Loos 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 0.90 hours per unit at $21.50 per hour.During the year,the company started and completed 26,800 units.Direct labor employees worked 25,220 hours at an average cost of $22.50 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?

Catherman Corporation manufactures one product. It does not maintain any beginning or ending 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. During the year, the company produced and sold 32,400 units at a price of $42.30 per unit. Its standard cost per unit produced is $36.90 and its selling and administrative expenses totaled $102,000. The company does not have any variable manufacturing overhead costs and it recorded the following variances during the year: -When the company closes its standard cost variances,the Cost of Goods Sold will increase (decrease)by:

Arena 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 $81,000 and budgeted activity of 18,000 hours. During the year, the company completed the following transactions: a. Purchased 35,400 pounds of raw material at a price of $4.60 per pound. b. Used 32,180 pounds of the raw material to produce 26,900 units of work in process. c. Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 23,810 hours at an average cost of $20.60 per hour. d. Applied fixed overhead to the 26,900 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 $67,800. Of this total, $3,800 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $64,000 related to depreciation of manufacturing equipment. e. Completed and transferred 26,900 units from work in process to finished goods. f. Sold (for cash) 27,100 units to customers at a price of $36.60 per unit. g. Transferred the standard cost associated with the 27,100 units sold from finished goods to cost of goods sold. h. Paid $149,000 of selling and administrative expenses. i. Closed all standard cost variances to cost of goods sold. The company calculated the following variances for the year: To answer the following questions, you will need to record transactions a through i in the worksheet below. This worksheet is similar to the worksheets in your text except that it has been split into two parts to fit on the page. PP&E (net) stands for Property, Plant, and Equipment net of depreciation. -The ending balance in the Raw Materials account will be closest to:

Lakatos 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. There is no variable manufacturing overhead. The standard cost card for the company's only product contains the following information concerning direct materials: During the year, the company completed the following transactions concerning direct materials: a. Purchased 151,800 kilos of raw material at a price of $9.70 per kilo. b. Used 140,870 kilos of the raw material to produce 38,100 units of work in process. The company calculated the following direct materials variances for the year: 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. -When recording the raw materials used in production in transaction (b)above,the Raw Materials inventory account will increase (decrease)by:

Lanciotti 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 $276,000 and budgeted activity of 24,000 hours. During the year,the company completed the following transactions: a.Purchased 110,100 pounds of raw material at a price of $6.10 per pound. b.Used 103,120 pounds of the raw material to produce 39,700 units of work in process. c.Assigned direct labor costs to work in process.The direct labor workers (who were paid in cash)worked 29,060 hours at an average cost of $21.80 per hour. d.Applied fixed overhead to the 39,700 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 $265,800.Of this total,$198,800 related to items such as insurance,utilities,and indirect labor salaries that were all paid in cash and $67,000 related to depreciation of manufacturing equipment. e.Transferred 39,700 units from work in process to finished goods. f.Sold for cash 34,600 units to customers at a price of $50.90 per unit. g.Completed and transferred the standard cost associated with the 34,600 units sold from finished goods to cost of goods sold. h.Paid $150,000 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 Raw Materials,Work in Process,and Finished Goods are recorded and carried at their standard cost,the fixed overhead applied to work in process is calculated by multiplying the predetermined overhead rate by the actual direct labor-hours worked.

Juliano 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 29,700 pounds of raw material at a price of $5.20 per pound and used 25,700 pounds of the raw material to produce 17,200 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 raw materials used in production are recorded,which of the following entries will be made?

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.

Mangrum 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. Information concerning the direct labor standards for the company's only product is as follows: During the year, the company assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 12,790 hours at an average cost of $19.50 per hour. The company calculated the following direct labor variances for the year: 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. -When recording the direct labor costs,the Work in Process inventory account will increase (decrease)by: