Scogin Corporation Uses a Standard Cost System in Which Inventories

question 107

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 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 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:

Aggregate Demand

The total demand for all goods and services within an economy at a particular time and price level.

Inflation

The speed at which the average price level of goods and services escalates, weakening the power to purchase.

Unemployment

The situation in which individuals who are capable of working and are actively searching for a job are unable to find employment.

Natural Rate

A concept in economics referring to the level of any economic variable, such as unemployment or interest, that is not affected by short-term fluctuations.