Neuhaus 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: Standard Quantity or Hours 1.7 gallons 0.70 hours 0.70 hours. Inputs Direct materials Direct labor Fixed manufacturing overhead Total standard cost per unit During the year, the company completed the following transactions: a. Purchased 52,900 gallons of raw material at a price of $7.60 per gallon. b. Used 46,820 gallons of the raw material to produce 27,600 units of work in process. Raw Materials Cash 1/1 $ 1,160,000 $45,900 Standard Price or Rate $7.50 per gallon $21.50 per hour. $6.00 per hour Work in Process $0 Standard Cost 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. $ 12.75 15.05 4.20 $32.00 Labor FOH FOH Quantity Labor Rate Efficiency Budget Volume Variance Variance Variance Variance Variance $0 $0 $0 $0 $0 Materials Materials. Finished Price Goods PP&E (net) = Variance $ 67,200 $ 757,400 = $0 = = a. b. When the purchase of raw materials is recorded in transaction (a) above, which of the following entries will be made? Retained Earnings $ 2,030,500
Neuhaus 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: Standard Quantity or Hours 1.7 gallons 0.70 hours 0.70 hours. Inputs Direct materials Direct labor Fixed manufacturing overhead Total standard cost per unit During the year, the company completed the following transactions: a. Purchased 52,900 gallons of raw material at a price of $7.60 per gallon. b. Used 46,820 gallons of the raw material to produce 27,600 units of work in process. Raw Materials Cash 1/1 $ 1,160,000 $45,900 Standard Price or Rate $7.50 per gallon $21.50 per hour. $6.00 per hour Work in Process $0 Standard Cost 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. $ 12.75 15.05 4.20 $32.00 Labor FOH FOH Quantity Labor Rate Efficiency Budget Volume Variance Variance Variance Variance Variance $0 $0 $0 $0 $0 Materials Materials. Finished Price Goods PP&E (net) = Variance $ 67,200 $ 757,400 = $0 = = a. b. When the purchase of raw materials is recorded in transaction (a) above, which of the following entries will be made? Retained Earnings $ 2,030,500
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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Question
Transcribed Image Text:Neuhaus 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:
Inputs
Direct materials
Direct labor
Fixed manufacturing overhead
Total standard cost per unit
Standard Quantity
or Hours
1.7 gallons
0.70 hours
0.70 hours
During the year, the company completed the following transactions:
a. Purchased 52,900 gallons of raw material at a price of $7.60 per gallon.
b. Used 46,820 gallons of the raw material to produce 27,600 units of work in process.
Raw
Materials
Cash
1/1 $ 1,160,000 $ 45,900
a.
b.
Standard Price or
Rate
$ 7.50 per gallon
$21.50 per hour
$6.00 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.
Work in Finished
Process Goods PP&E (net) =
$0 $ 67,200 $ 757,400 =
=
Standard
Cost
=
$ 12.75
15.05
4.20
$ 32.00
Materials Materials
Price
Variance
$0
Labor
FOH
FOH
Quantity Labor Rate Efficiency Budget Volume
Variance Variance Variance Variance Variance
$0
$0
$0
$0
$0
When the purchase of raw materials is recorded in transaction (a) above, which of the following entries will be made?
Retained
Earnings
$ 2,030,500
Transcribed Image Text:Multiple Choice
O
O
$5,290 in the Materials Quantity Variance column
$5,290 in the Materials Price Variance column
($5,290) in the Materials Quantity Variance column
($5,290) in the Materials Price Variance column
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