Mocha Company Manufactures a Single Product by a Continuous Process

question 33

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 for direct labor is

• A) Work in Process-Department 1                 65,000     Wages Payable                                                                   65,000
• B) Wages Payable                                         125,000     Work in Process-Department 1                                      125,000
• C) Work in Process-Department 1              125,000     Wages Payable                                                                 125,000
• D) Wages Payable                                           65,000     Work in Process-Department 1                                        65,000

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Definitions:

Diminishing Marginal Product

The principle where the incremental output of a production process decreases as the amount of a single factor of production is incrementally increased, holding all other factors constant.

Inverted Production Function

A concept where inputs and outputs in a production process are reversed in analysis, possibly examining the relationship of output levels to required inputs.

Total Product

The overall quantity of output that a firm produces, usually within a given period of time.

Marginal Product

The rise in output due to an extra unit of input.