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Lisser Corporation Uses a Standard Cost System in Which Inventories

question 4

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Lisser 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 2.7 liters per unit at $7.50 per liter or $20.25 per unit.During the year,the company purchased 67,300 liters of raw material at a price of $8.00 per liter and used 61,660 liters of the raw material to produce 22,800 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 Raw Materials inventory account will increase (decrease) by:

Definitions:

Standard Machine-Hours

A predetermined measure of how many hours machinery should be operated to meet production goals, used for planning and efficiency analysis.

Variable Overhead Rate Variance

The difference between the actual variable overhead costs incurred and the standard cost of the variable overhead that should have been incurred based on the actual activity level.

Critical Part

Critical Part refers to a component or element of a system that is essential to its function, where failure could lead to a system stoppage or serious defect.

Commercial Airline Seats

The seats available for purchase on a commercial aircraft, categorized into various classes like economy, business, and first class.