Bowen Company manufactures one product it does not maintain

Bowen Company manufactures one product, it does not maintain any beginning or ending inventories, and its uses a standard cost denominator. Th during the period. Bowen\'s standard cost card for its only product is as follows: predetermined overhead rate includes $1,000,000 of fixed overhead in the numerator and 50000 direct labor-hours in the e company purchased (with cash) a nd used 37000 yards of raw materials at a cost of $10 20 per yard. Its direct rs worked 20,200 hours and were paid a total of $290,400 The company started and completed 8,500 units Standard Price or Rate $12.00 per yard $14.00 per hour $20.00 per hour Standard Cost Quantity or Input Direct materials Direct labor Fixed manufacturing overhead 3.4 yards 2.8 hours 2.8 hours $ 40.80 39.20 56.00 $136.00 Total standard cost per unit Required 1. When recording the raw material purchases a. The Raw Materials inventory will increase (decrease) by how much? b. The Cash will increase (decrease) by how much? 2. When recording the raw materials used in production a. The Raw Materials inventory will increase (decrease) by how much? b. The Work in Process inventory will increase (decrease) by how much? 3. When recording the direct labor costs added to production a. The Work in Process inventory will increase (decrease) by how much? b. The Cash will increase (decrease) by how much? 4. When applying fixed manufacturing overhead to production, the Work in Process inventory will increase (decrease) by how much? 5 When transferring manufacturing costs from Work in Process to Finished Goods, the Finished Goods inventory will increase (decrease) by how much? 1a. The raw will 1b. The cash wall

Solution

Requirement 1 :

a. Raw materials inventory will increase by $ 444,000

b. Cash will decrease by $ 377,400.

Journal entry :

Requirement 2:

a. Raw materials inventory will decrease by $ 444,000

b. Work in Process inventory will increase by $ 346,800

Journal entry:

Requirement 3 :

a. Work in Process Inventory will increase by $ 333,200.

b. Cash will decrease by $ 290,400.

Journal Entry:

Requirement 4 :

Work in Process will increase by $ 404,000. ( 20,200 x $ 20)

Requirement 5 :

Finished Goods inventory will increase by $ 1,084,000.

	Debit	Credit
Raw Materials Inventory	444,000
Materials Price Variance [ 37,000 yards x ( 12.00 - 10.20)		66,600
Cash		377,400