Robnett Corporation Manufactures One Product

question 59

Multiple Choice

Robnett Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs. There is no variable manufacturing overhead. The standard cost card for the company's only product is as follows:
During the year, the company completed the following transactions:
a. Purchased 106,900 liters of raw material at a price of $6.80 per liter.
b. Used 93,760 liters of the raw material to produce 24,700 units of work in process.
Assume that all transactions are recorded on the below worksheet, which is similar to the worksheet shown in your text except that it has been divided into two parts so that it fits on one page. The beginning balances in each of the accounts have been given. PP&E (net) stands for Property, Plant, and Equipment net of depreciation.

-When the purchase of raw materials is recorded in transaction (a) above,which of the following entries will be made?

• A) $32,070 in the Materials Price Variance column
• B) ($32,070) in the Materials Quantity Variance column
• C) $32,070 in the Materials Quantity Variance column
• D) ($32,070) in the Materials Price Variance column

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Definitions:

Profitability Ratios

Ratios that compare income with one or more primary activities.

Net Profit Margin

A financial ratio representing the percentage of net income to sales revenue, indicating how much of each dollar earned by the company is translated into profits.

Return on Assets

A ratio indicating how efficiently a company is using its assets to generate profit, calculated as net income divided by total assets.

Earnings Per Share

A metric that divides a company's profit available to its common stockholders by the average outstanding shares.