Landoni Corporation Uses a Standard Cost System in Which Inventories

question 71

Multiple Choice

Landoni 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 kilos per unit at $5.00 per kilo or $13.50 per unit.During the year,the company purchased 75,200 kilos of raw material at a price of $4.90 per kilo and used 69,290 kilos of the raw material to produce 25,700 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) ($368,480)
• B) $376,000
• C) ($376,000)
• D) $368,480

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Definitions:

Null Hypothesis

A statistical hypothesis that assumes no significant difference or effect exists between certain states or parameters in a population.

Significance Level

A threshold in hypothesis testing that determines the probability of rejecting the null hypothesis when it is actually true.

SRS

An acronym for Simple Random Sampling, a statistical method where each member of a population has an equal probability of being included in the sample.

Null Hypothesis

A statement or assumption that there is no effect or no difference, used as a starting point for statistical significance testing.