Chapter 9.B, Problem 3E

Standard Cost Flows
Bowen Company manufactures one product, it does not maintain any beginning or ending inventories, and its uses a standard cost system. Its predetennincd 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 30,000 yards of raw materials at a cost of $9.80 per yard. Its direct laborers worked 20,000 hours and were paid a total of 5290.000. The company page 461 started and completed 8.100 units of finished goods during the period. Bowens standard cost card for its only product is as follows:

Required:
1. When recording the raw material purchases:
a. The Raw Materials inventory ill increase (decrease) by how much?
b. The Cash il1 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 inventors 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?