Given the Following Account Balances at the End of the First

question 103

Multiple Choice

Given the following account balances at the end of the first year of operations: Direct materials inventory $ 60,000
Work in process inventory 120,000
Finished goods inventory 180,000
Cost of goods sold 600,000
Direct material price variance 65,000 U
Direct material efficiency 195,000 F
Assuming that variances are considered material, the entry and amount of the direct material price variance allocated to Cost of Goods Sold is:

• A)Debit $40,625
• B)Debit $41,082
• C)Credit $43,333
• D)Debit $39,935

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Definitions:

Limited Liability Company

A flexible form of enterprise that blends elements of partnership and corporate structures, protecting members against personal liability beyond their investment.

General Partnership

A form of business partnership where all partners share both the management and the liability for the company's debts.

Capital Balance

The amount of money that an entity has in its capital account, reflecting the net worth contributed by the owners/shareholders plus retained earnings.

Bonus Method

An accounting method for recording partnership transactions where a new partner's investment is more than or less than the book value of the capital they are entitled to.