Johanson Corporation Uses a Standard Cost System in Which Inventories

question 37

Multiple Choice

Johanson 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 89,600 pounds of raw material at a price of $7.80 per pound and used 79,120 pounds of the raw material to produce 23,300 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 purchases, the Raw Materials inventory account will increase (decrease) by:

• A)$698,880
• B)($716,800)
• C)($698,880)
• D)$716,800

---

Definitions:

Aton

The sun disk or deity in ancient Egyptian religion, representing a monotheistic form of worship under Pharaoh Akhenaten.

Osiris

An ancient Egyptian god associated with the afterlife, resurrection, and agriculture, often depicted as a mummified ruler.

Civilization

An advanced stage of human social development and organization that is marked by complex political, economic, and cultural institutions.

Nile

is the longest river in Africa, flowing northward through northeastern Africa, historically supporting the civilizations of ancient Egypt.