Scogin Corporation Uses a Standard Cost System in Which Inventories

question 271

Multiple Choice

Scogin 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 76,500 pounds of raw material at a price of $8.70 per pound and used 71,880 pounds of the raw material to produce 19,400 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 Property, Plant, and Equipment (net) . All of the variance columns are on the right-hand-side of the equals sign along with the column for Retained Earnings.When recording the raw materials used in production, the Work in Process inventory account will increase (decrease) by:

• A) ($646,020)
• B) $646,020
• C) ($646,920)
• D) $646,920

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Definitions:

Interest Accrual

The recognition of interest earned or payable that has accumulated but not yet been recorded or paid.

Debt Investments

Investments made by purchasing bonds or other debt instruments, with the expectation of earning interest income and the return of principal.

Net Income

The amount of profit left after all operating expenses, taxes, and interest are deducted from total revenue.

Interest Receivable

An asset account on the balance sheet representing the amount of interest income that has been earned but not yet received in cash.