Mocha Company Manufactures a Single Product by a Continuous Process

question 29

Multiple Choice

Mocha Company manufactures a single product by a continuous process, involving three production departments. The records indicate that direct materials, direct labor, and applied factory overhead for Department 1 were $100,000, $125,000, and $150,000, respectively. The records further indicate that direct materials, direct labor, and applied factory overhead for Department 2 were $55,000, $65,000, and $80,000, respectively. In addition, work in process at the beginning of the period for Department 1 totaled $75,000, and work in process at the end of the period totaled $60,000.
The journal entry to record the flow of costs into Department 1 during the period for applied overhead is

• A) Factory Overhead-Department 1               150,000     Work in Process-Department 1                                           150,000
• B) Work in Process-Department 1                 125,000     Factory Overhead-Department 1                                        125,000
• C) Work in Process-Department 1                   80,000     Factory Overhead-Department 1                                          80,000
• D) Work in Process-Department 1                 150,000     Factory Overhead-Department 1                                        150,000

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Definitions:

Complete Information

A situation in decision-making where all individuals have access to all relevant information needed to make an informed decision.

Action Alternatives

Action alternatives are the different courses of action or strategies that can be taken in response to a specific problem or situation.

Optimising Decision

Chooses the alternative giving the absolute best solution to a problem.

Absolute Best Solution

The optimal resolution to a problem or challenge, surpassing all other alternatives in effectiveness.