At the End of the Period, Massive Designs Had the Following

question 67

Multiple Choice

At the end of the period, Massive Designs had the following debit balances in its accounts. $\begin{array}{lr}\text { Raw M aterials Inventory } & \$ 20,000 \\\text { Work in Process Inventory } & 40,000 \\\text { Finished Goods Inventory } & 60,000 \\\text { Cost of Goods Sold } & 400,000 \\\text { Manufacturing Overhead } & 8,000\end{array}$ Assuming the amount in Manufacturing Overhead is considered material, the entry to allocate Manufacturing Overhead will include a

• A)debit to Cost of Goods Sold for $6,400.
• B)debit to Cost of Goods Sold for $8,000.
• C)debit to Cost of Goods sold for $6,154.
• D)credit to Work in Process Inventory for $6,400.

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Definitions:

Direct Labor-Hours

A measure of the total time workers spend directly manufacturing a product or performing a service.

Direct Labor Rate

The average cost per hour for labor directly involved in the production of goods or services.

Direct Labor Budget

A forecast of the labor costs directly associated with production, factoring in anticipated hourly rates and hours needed.

Direct Labor-Hours

The total hours worked by employees directly involved in the manufacturing process, used as a base for allocating overheads.