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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Definitions:

Office Supplies Account

An account used to track expenses related to materials and supplies used in an office environment.

Adjusting Entry

At the closure of an accounting period, entries are documented to attribute earnings and outlays to the span during which they genuinely happened.

Supplies Purchased

Represents the purchase of tangible goods or materials used in the production of goods or for the operation of the company.

Accrued Revenues

Accrued revenues are revenues that have been earned but not yet received in cash or recorded, representing assets on the balance sheet.