Mangrum 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. Information concerning the direct labor standards for the company's only product is as follows:InputsStandard Quantityor HoursStandard Price or RateStandard CostDirect labor0.70hours$21.50per hour$15.05During the year, the company assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 12,790 hours at an average cost of $19.50 per hour. The company calculated the following direct labor variances for the year: Labor rate variance$25,580FLabor efficiency variance$6,450FAssume that all transactions are recorded on the below

Question

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.?CashRaw MaterialsWork in ProcessFinished GoodsPP&E (net)?1/1$1,130,000$23,940$0$87,870$526,400=?Materials Price VarianceMaterials Quantity VarianceLabor Rate VarianceLabor Efficiency VarianceFOH Budget VarianceFOH Volume VarianceRetained Earnings1/1$0$0$0$0$0$0$1,768,210When recording the direct labor costs, the Cash account will increase (decrease) by:

A. $249,405
B. ($281,435)
C. ($249,405)
D. $281,435

Answer 1

Answer: C