Bowen Company manufactures one product, it does not maintain any beginning or ending inventories, and its uses a standard costsystem. Its predetermined overhead rate includes $1,000,000 of fixed overhead in the numerator and 50,000 direct labor-hours in thedenominator. The company purchased (with cash) and used 46,000 yards of raw materials at a cost of $11.20 per yard. Its directlaborers worked 20,700 hours and were paid a total of $291,400. The company started and completed 9,500 units of finished goodsduring the period. Bowen's standard cost card for its only product is as follows:(1)Standard(2)StandardPriceor Rate$17.00 per yard$14.00 per hourStandardInputsDirect materialsDirect laborFixed manufacturing overheadQuantity orHours4.4 yards3.8 hoursCost(1) x (2)$ 74.8053.2076.003.8 hours$20.00 per hourTotal standard cost per unit$204.00Required: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?

Name: Bowen Company manufactures one product, it does not maintain any begi
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Description: Bowen Company manufactures one product, it does not maintain any beginning or ending inventories, and its uses a standard costsystem. Its predetermined overhead rate includes $1,000,000 of fixed overhead in the numerator and 50,000 direct labor-hour

Work in Progress Inventory represents that portion of products which have been started in the…

Business

Accounting

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?

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?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

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Question

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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 46,000 yards of raw materials at a cost of $11.20 per yard. Its direct
laborers 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:
(1)
Standard
(2)
Standard
Price
or Rate
$17.00 per yard
$14.00 per hour
Standard
Inputs
Direct materials
Direct labor
Fixed manufacturing overhead
Quantity or
Hours
4.4 yards
3.8 hours
Cost
(1) x (2)
$ 74.80
53.20
76.00
3.8 hours
$20.00 per hour
Total standard cost per unit
$204.00
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?

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