Freiling 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 is as follows:
During the year, the company assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 14,890 hours at an average cost of $22.80 per hour.
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 direct labor costs,the Work in Process inventory account will increase (decrease)by:
A) $318,780
B) ($339,492)
C) $339,492
D) ($318,780)

Question

Freiling 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 is as follows:
  During the year, the company assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 14,890 hours at an average cost of $22.80 per hour.
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 direct labor costs,the Work in Process inventory account will increase (decrease)by:
A) $318,780 
B) ($339,492) 
C) $339,492 
D) ($318,780)

Quizplus · Accepted Answer

Work in Process increases by the standard cost of the standard amount of hours allowed for the actual output, which is SH × SR = (16,100 units × 0.90 hours per unit) × $22.00 per hour = 14,490 hours × $22.00 per hour = $318,780.

Freiling Corporation Manufactures One Product