Asked by Theodora Olympia on Jul 16, 2024
Verified
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
Raw Materials Inventory
The total cost of all the materials that are used in the production of goods but have not yet been transformed into finished products.
Raw Materials Purchases
Raw Materials Purchases involve the acquisition of basic inputs needed to manufacture goods or provide services, a crucial component of production costs.
Direct Materials Standards
These are predefined criteria determining the cost and quantity of direct materials supposed to be used in production processes.
- Attain knowledge about the financial outcomes of changes in raw material costs and volumes.
Verified Answer
Learning Objectives
- Attain knowledge about the financial outcomes of changes in raw material costs and volumes.
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