Bohon Corporation Manufactures One Product

question 127

Multiple Choice

Bohon Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in which inventories are recorded at their standard costs. There is no variable manufacturing overhead. The standard cost card for the company's only product contains the following information concerning direct materials:
During the year, the company completed the following transactions concerning direct materials:
a. Purchased 19,700 pounds of raw material at a price of $4.70 per pound.
b. Used 18,500 pounds of the raw material to produce 18,400 units of work in process.
The company calculated the following direct materials variances for the year:
Assume that all transactions are recorded on the below worksheet, which is similar to the worksheet shown in your text except that it has been divided into two parts so that it fits on one page. The beginning balances in each of the accounts have been given. PP&E (net) stands for Property, Plant, and Equipment net of depreciation.

-When recording the raw materials used in production in transaction (b) above,the Raw Materials inventory account will increase (decrease) by:

• A) ($86,950)
• B) $101,750
• C) $86,950
• D) ($101,750)

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Definitions:

Partnership Assets

Properties, funds, or resources owned collectively by a partnership and used in conducting its business activities.

Creditor

An entity to which a debtor owes money.

Agency

The fiduciary relationship that arises when one person consents to have another act on his behalf and subject to his control and the other consents to do so.

Boats

Watercraft of various sizes and types designed to travel on, through, or under water, primarily used for transportation, recreation, or sports.