Use the Following Information for the Next 2 Questions

question 43

Multiple Choice

Use the following information for the next 2 questions.
Thurston Corp. uses a standard job cost system with the following standards: Thurston actually used 2,000 pounds of direct material that cost $10,000 and 500 direct labor hours that cost $7,500.
-The entry to record the usage of direct labor would include a

• A) Credit to Direct labor efficiency variance for $77.50
• B) Debit to Work in process inventory for $7,500
• C) Credit to Accrued payroll for $7,827.50
• D) Debit to Direct labor price variance for $250

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Definitions:

Plantwide Overhead Rate

An overhead allocation rate used throughout an entire plant or company to allocate indirect costs to products.

Overhead Allocation Base

A measure used to distribute overhead costs among various products or service units within a business.

Machine Hours

A measure of the amount of time machines are operated in the production process, commonly used as an allocation base for assigning overhead costs.

Indirect Labor

Labor costs attributed to anything other than the direct manufacturing of goods or provision of services, such as maintenance, supervision, and administrative tasks.