Minstrel Manufacturing Uses a Job Order Costing System

question 56

Multiple Choice

Minstrel Manufacturing uses a job order costing system.During one month Minstrel purchased $198,000 of raw materials on credit;issued materials to production of $195,000 of which $30,000 were indirect.Minstrel incurred a factory payroll of $150,000,paid in cash,of which $40,000 was indirect labor.Minstrel uses a predetermined overhead rate of 150% of direct labor cost.The journal entry to record the issuance of materials to production is:

• A)Debit Raw Materials Inventory $195,000;credit Accounts Payable $195,000.
• B)Debit Work in Process Inventory $195,000;credit Raw Materials Inventory $195,000.
• C)Debit Raw Materials Inventory $195,000;credit Work in Process Inventory $195,000.
• D)Debit Work in Process Inventory $165,000;debit Factory Overhead $30,000;credit Raw Materials Inventory $195,000.
• E)Debit Finished Goods Inventory $195,000;credit Raw Materials Inventory $195,000.

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Definitions:

Vacation Pay Expense

Represents the cost to an employer for employees' earned but not yet taken vacation time, recognized as a liability.

Operations Year

The 12-month period used by businesses to measure financial and operational performance, often aligning with the fiscal year but not necessarily the calendar year.

Defined Contribution Plan

A pension plan in which the contributions into the plan are defined but the employee’s pension may vary depending on investment performance.

Annual Pension Benefit

The amount of money an individual receives from a retirement plan each year after retirement.