Clarksen Company Uses a Process Costing System

question 218

Multiple Choice

Clarksen Company uses a process costing system.The company requisitioned $93,000 of materials for Department A and $67,000 of materials for Department D.The entry to record the use of the direct materials by these two departments is:

• A)Debit Raw Materials Inventory $160,000; credit Accounts Payable $160,000.
• B)Debit Work in Process Inventory-Dept.A $93,000; debit Work in Process Inventory-Dept.D $67,000; credit Raw Materials Inventory $160,000.
• C)Debit Factory overhead $160,000; credit Raw Materials Inventory $160,000.
• D)Debit Raw Materials Inventory-Dept.A $93,000; debit Raw Materials Inventory-Dept.D $67,000; credit Work in Process Inventory $160,000.
• E)Debit Work in Process Inventory-Dept.A $93,000; debit Work in Process Inventory-Dept.D $67,000; credit Accounts Payable $160,000.

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Definitions:

R&D Expenditures

Funds allocated towards research and development activities in order to innovate or improve products or services.

Imitation Problem

The potential for a firm’s rivals to produce a close variation of (imitate) a firm’s new product or process, greatly reducing the originator’s profit from R&D and innovation.

Innovation Diffusion

The process by which new ideas, practices, or technologies spread within a population or society, influencing patterns of adoption and utilization.

Patents

Patents are legal documents granted by the government that give inventors exclusive rights to their innovations for a specific period, preventing others from making, using, or selling the invention without permission.