Bialas Corporation Uses a Standard Cost System in Which Inventories

question 46

Multiple Choice

Bialas 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 standards for direct materials for the company's only product specify 1.6 liters per unit at $7.00 per liter or $11.20 per unit.During the year,the company purchased 36,400 liters of raw material at a price of $7.40 per liter and used 32,060 liters of the raw material to produce 20,100 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 purchase of raw materials is recorded,which of the following entries will be made?

• A) ($14,560) in the Materials Quantity Variance column
• B) ($14,560) in the Materials Price Variance column
• C) $14,560 in the Materials Price Variance column
• D) $14,560 in the Materials Quantity Variance column

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Definitions:

Evaluation Solutions

The process of critically assessing and determining the effectiveness of strategies, interventions, or programs to solve specific problems or meet objectives.

Confirmation Bias

The tendency to search for and use information that supports one’s ideas rather than refutes them.

Hindsight Bias

The tendency to report falsely, after the fact, that one has accurately predicted an outcome.

Selection Bias

The bias that occurs when the subjects or conditions chosen for a study do not represent the target population, affecting the validity of outcomes.