Standard Products Company Recognizes Variances from Standards at the Earliest

question 93

Essay

Standard Products Company recognizes variances from standards at the earliest opportunity, and the quantity of direct materials purchased is equal to the quantity used. The following information is available for the most recent month. Assume the allocation base for fixed overhead costs is the number of units.
Journalize the allocation of overhead costs to Work in Process Inventory and closing manufacturing overhead costs to overhead variances.

---

Definitions:

Expire

To come to an end or cease to be valid, as in the expiration of a contract, policy, or agreement.

Spot-Futures Parity

A financial theory stating that the spot and future prices of a commodity, currency, or security will converge at the futures contract's expiration.

Violation

An instance of failing to comply with a set rule, regulation, or standard.

Arbitrage Opportunities

Situations where a profit can be made with no risk by simultaneously buying and selling assets in different markets or forms due to price discrepancies.