Arena 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 and any variances are closed directly to Cost of Goods Sold There is no variable manufacturing overhead The standard cost card for the company's only product is as follows InputsStandard Quantity or HoursStandard Price or RateStandard CostDirect materials1 2pounds$5 50per pound$6 60Direct labor0 90hours$21 00per hour18 90Fixed manufacturing overhead0 90hours$4 50per hour4 05Total standard cost per unit$29 55 The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $81,000 and budgeted activity of 18,000 hours During the year, the company completed the following transactions Purchased 35,400 pounds of raw material at a price of $4 60 per pound Used 32,180 pounds of the raw material to produce 26,900 units of work in process Assigned direct labor costs to work in process The direct labor workers (who were paid in cash) worked 23,810 hours at an average cost of $20 60 per hour Applied fixed overhead to the 26,900 units in work in process inventory using the predetermined overhead rate multiplied by the number of direct labor hours allowed Actual fixed overhead costs for the year were $67,800 Of this total, $3,800 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $64,000 related to depreciation of manufacturing equipment Completed and transferred 26,900 units from work in process to finished goods Sold (for cash) 27,100 units to customers at a price of $36 60 per unit Transferred the standard cost associated with the 27,100 units sold from finished goods to cost of goods sold Paid $149,000 of selling and administrative expenses Closed all standard cost variances to cost of goods sold The company calculated the following variances for the year Materials price variance$31,860FMaterials quantity variance$550FLabor rate variance$9,524FLabor efficiency variance$8,400FFixed manufacturing overhead budget variance$13,200FFixed manufacturing overhead volume variance$27,945F To answer the following questions, you will need to record transactions a through i in the worksheet below This worksheet is similar to the worksheets in your text except that it has been split into two parts to fit on the page PP E (net) stands for Property, Plant, and Equipment net of depreciation CashRaw MaterialsWork in ProcessFinished GoodsPP E (net) Materials Price VarianceMaterials Quantity VarianceLabor Rate VarianceLabor Efficiency VarianceFOH Budget VarianceFOH Volume VarianceRetained Earnings1 1$1,200,000$29,700$0$70,920$505,400 $0$0$0$0$0$0$1,806,020a b c d e f g h i 12 31 The ending balance in the PP E (net) account will be closest to

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jun 28, 2024

Arena Corporation manufactures one product. It does not maintain any beginning or ending Work in Process inventories. The company uses a standard cost system in

Arena 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 and any variances are closed directly to Cost of Goods Sold. There is no variable manufacturing overhead.

The standard cost card for the company's only product is as follows:

InputsStandard Quantity

or HoursStandard Price or RateStandard CostDirect materials1.2pounds$5.50per pound$6.60Direct labor0.90hours$21.00per hour18.90Fixed manufacturing overhead0.90hours$4.50per hour4.05Total standard cost per unit$29.55

The standard fixed manufacturing overhead rate was based on budgeted fixed manufacturing overhead of $81,000 and budgeted activity of 18,000 hours.

During the year, the company completed the following transactions:

Purchased 35,400 pounds of raw material at a price of $4.60 per pound.
Used 32,180 pounds of the raw material to produce 26,900 units of work in process.
Assigned direct labor costs to work in process. The direct labor workers (who were paid in cash) worked 23,810 hours at an average cost of $20.60 per hour.
Applied fixed overhead to the 26,900 units in work in process inventory using the predetermined overhead rate multiplied by the number of direct labor-hours allowed. Actual fixed overhead costs for the year were $67,800. Of this total, $3,800 related to items such as insurance, utilities, and indirect labor salaries that were all paid in cash and $64,000 related to depreciation of manufacturing equipment.
Completed and transferred 26,900 units from work in process to finished goods.
Sold (for cash) 27,100 units to customers at a price of $36.60 per unit.
Transferred the standard cost associated with the 27,100 units sold from finished goods to cost of goods sold.
Paid $149,000 of selling and administrative expenses.
Closed all standard cost variances to cost of goods sold.

The company calculated the following variances for the year:

Materials price variance$31,860FMaterials quantity variance$550FLabor rate variance$9,524FLabor efficiency variance$8,400FFixed manufacturing overhead budget variance$13,200FFixed manufacturing overhead volume variance$27,945F

To answer the following questions, you will need to record transactions a through i in the worksheet below. This worksheet is similar to the worksheets in your text except that it has been split into two parts to fit on the page. PP&E (net) stands for Property, Plant, and Equipment net of depreciation.

CashRaw MaterialsWork in ProcessFinished GoodsPP&E (net)=Materials Price VarianceMaterials Quantity VarianceLabor Rate VarianceLabor Efficiency VarianceFOH Budget VarianceFOH Volume VarianceRetained Earnings1/1$1,200,000$29,700$0$70,920$505,400=$0$0$0$0$0$0$1,806,020a.=b.=c.=d.=e.=f.=g.=h.=i.=12/31=

The ending balance in the PP&E (net) account will be closest to: