Colbeck Corporation Uses a Standard Cost System in Which Inventories

question 35

Multiple Choice

Colbeck 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 68,000 gallons of raw material at a price of $5.40 per gallon and used 62,660 gallons of the raw material to produce 18,400 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:

• A)($375,960)
• B)$375,960
• C)($338,364)
• D)$338,364

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Definitions:

Adding

The mathematical process of combining two or more quantities to get a total or sum.

Borrowing

The act of receiving something from someone with the intention of returning it or its equivalent later.

Decimals

Numerical symbols used in the decimal system, involving a point that separates the whole number from the fractional part.

Household Measurement

A system of units used in cooking and for other household tasks, such as cups, tablespoons, and teaspoons.