Johanson 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 standard cost card for the company's only product is as follows: InputsStandard Quantityor HoursStandard Price or RateStandard CostDirect materials3.4pounds$8.00per pound$27.20Direct labor0.70hours$21.00per hour 14.70Fixed manufacturing overhead0.70hours$13.50per hour 9.45Total standard cost per unit $51.35During the year, the company purchased 89,600 pounds of raw material at a price of $7.80 per pound and used 79,120 pounds of the raw material to produce 23,300 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

Question

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. $698,880
B. ($698,880)
C. ($716,800)
D. $716,800

Answer 1

Answer: D