Rees Manufacturing uses a standard cost system Standards for direct materials are as follows Direct materials (pounds per unit of output) 3 Cost per pound of direct materials $6 Actual purchases of direct materials for the current month are 10,000 pounds for $48,600 Planned and actual production for the month is 3,100 units Rees has issued 10,000 pounds of direct materials to production The journal entry to record this transaction is A a debit to Work in Process Inventory for $55,800, a credit to Raw Materials Inventory for $60,000, and a debit to Direct Materials Efficiency Variance for $4,200 B a debit to Work in Process Inventory for $45,198, a credit to Raw Materials Inventory for $55,800, and a debit to Direct Materials Efficiency Variance for $10,602 C a debit to Work in Process Inventory for $45,198, a credit to Raw Materials Inventory for $60,000, and a debit to Direct Materials Efficiency Variance for $14,802 D a debit to Work in Process Inventory for $60,000, a credit to Raw Materials Inventory for $48,600, and a credit to Direct Materials Efficiency Variance for $60,000 Home Industries is considering replacing a machine that is presently used in its production process Which of the following amounts represents a sunk cost Old Machine Replacement Machine Original cost $55,000 $45,000 Remaining useful life in years 5 5 Current age in years 5 0 Book value $33,000 Current disposal value in cash $9,000 Future disposal value in cash (in 5 years) $0 $0 Annual cash operating costs $8,000 $4,000 A $55,000 B $45,000 C $33,000 D $9,000

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Question: Rees Manufacturing uses a standard cost system. Standards for direct materials are as? follows: Direct materials? (pounds per unit of? output) 3 Cost per pound

Rees Manufacturing uses a standard cost system. Standards for direct materials are as? follows:

Direct materials? (pounds per unit of? output)	3
Cost per pound of direct materials	?$6

Actual purchases of direct materials for the current month are? 10,000 pounds for? $48,600. Planned and actual production for the month is? 3,100 units. Rees has issued? 10,000 pounds of direct materials to production. The journal entry to record this transaction is? ________.

a debit to? Work-in-Process Inventory for? $55,800, a credit to Raw Materials Inventory for? $60,000, and a debit to Direct Materials Efficiency Variance for? $4,200

a debit to? Work-in-Process Inventory for? $45,198, a credit to Raw Materials Inventory for? $55,800, and a debit to Direct Materials Efficiency Variance for? $10,602

a debit to? Work-in-Process Inventory for? $45,198, a credit to Raw Materials Inventory for? $60,000, and a debit to Direct Materials Efficiency Variance for? $14,802

a debit to? Work-in-Process Inventory for? $60,000, a credit to Raw Materials Inventory for? $48,600, and a credit to Direct Materials Efficiency Variance for? $60,000

Home Industries is considering replacing a machine that is presently used in its production process. Which of the following amounts represents a sunk? cost?

	Old Machine	Replacement Machine
Original cost	?????? $55,000	?????? $45,000
Remaining useful life in years	5	5
Current age in years	5	0
Book value	???? $33,000
Current disposal value in cash	? $9,000
Future disposal value in cash? (in 5? years)	?$0	?$0
Annual cash operating costs	??? $8,000	? $4,000

?$55,000

?$45,000

?$33,000

?$9,000

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