Use the Following Information for the Next 5 Questions

question 7

Multiple Choice

Use the following information for the next 5 questions.
Mason, Inc. uses a standard costing system. Overhead costs are allocated based on direct labor hours. The standard variable overhead and fixed overhead rates are $1 and $5 per direct labor hour, respectively. Data relevant for the current period include:
-The purchase of direct materials would be recorded in direct materials inventory at

• A) $540,000
• B) $585,000
• C) $600,000
• D) $650,000

---

Definitions:

Allowance Method

An accounting technique used to account for expected credit losses on accounts receivable by anticipating uncollectible accounts.

Market Valuation

Market valuation is the process of determining the monetary value of a company or asset in the marketplace, typically reflected in its stock price or the total market capitalization.

Direct Method

A cash flow statement presentation that itemizes the major categories of gross cash receipts and payments, providing a clearer view of a company's cash flow from operating activities.

Ending Inventory

The total value of a company's merchandise, raw materials, work-in-progress, and finished goods at the end of an accounting period.