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Karim Corporation uses a standard cost system in which inventories are recorded at their standard costs and any variances are closed directly to Cost of

Karim 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 companys only product is as follows:

Inputs Standard Quantity or Hours Standard Price or Rate Standard Cost
Direct materials 1.5 gallons $ 9.00 per gallon $ 13.50
Direct labor 0.70 hours $ 21.50 per hour 15.05
Fixed manufacturing overhead 0.70 hours $ 9.00 per hour 6.30
Total standard cost per unit $ 34.85

During the year, the company started and completed 31,500 units. Direct labor employees worked 23,650 hours at an average cost of $19.50 per hour.

Assume that all transactions are recorded on a worksheet as shown in the text. On the left-hand side of the equals sign 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 direct labor costs, the Work in Process inventory account will increase (decrease) by:

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