Lemke Corporation Uses a Standard Cost System in Which Inventories

question 45

Multiple Choice

Lemke 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 started and completed 12,300 units.Direct labor employees worked 10,540 hours at an average cost of $22.40 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 the direct labor cost is recorded, which of the following entries will be made?

• A)$20,026 in the Labor Efficiency Variance column
• B)$20,026 in the Labor Rate Variance column
• C)($20,026)in the Labor Rate Variance column
• D)($20,026)in the Labor Efficiency Variance column

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Definitions:

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Institutions established by governments to administer justice in civil, criminal, and administrative matters through the application of law.

Injunction

A judicial order that requires a party to do or to refrain from doing specific acts, used to prevent harm or to maintain the status quo during litigation.

Unionization

is the process by which workers form or join a union to collectively negotiate with their employers regarding wages, working conditions, and other employment related matter.

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