Rhudy Corporation Uses a Standard Cost System in Which Inventories

question 117

Multiple Choice

Rhudy 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 direct labor standards for the company's only product specify 0.60 hours per unit at $20.00 per hour.During the year,the company started and completed 20,700 units.Direct labor employees worked 12,120 hours at an average cost of $18.90 per hour. 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 direct labor costs,the Work in Process inventory account will increase (decrease) by:

• A) ($229,068)
• B) ($248,400)
• C) $229,068
• D) $248,400

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