On January 1, 20X2, the Ledger of Global Corporation Correctly

question 136

Multiple Choice

On January 1, 20X2, the ledger of Global Corporation correctly showed supplies inventory of $500. During 20X2, supplies purchases amounted to $700. A count (inventory) of supplies on hand at December 31, 20X2, showed $400. The 20X2 statement of earnings should report supplies expense amounting to which of the following?

• A) $700.
• B) $800.
• C) $1,100.
• D) $1,200.

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Definitions:

Direct Materials

Raw materials that can be directly attributed to the production process of a specific product.

Direct Labor

The cost associated with the work of employees directly involved in the production of goods or services.

Departmental Overhead Rate Method

A costing method that calculates different overhead rates for each department within a factory, based on each department's specific operational costs.

Overhead Rate

A calculation used to allocate indirect costs to produced goods based on a certain measure, like labor hours or machine hours.