Allen Company Has the Following Information for the Assembly Department

question 56

Multiple Choice

Allen Company has the following information for the Assembly Department for October:
$\begin{array}{lr}\text { Materials purchased } & \$ 40,000 \\\text { Materials used } & 44,000 \\\text { Direct labour } & 30,000 \\\text { Actual manufacturing overhead } & 56,000 \\\text { Cost of goods completed and transferred to the Finishing Dept. } & 120,000\end{array}$
Overhead rate is 200 percent of direct labour costs.
Allen Company uses a process costing system for the Assembly Department.
-Refer to the figure.What debit or credit would the journal entry to record materials purchased include?

• A)a debit to materials inventory for $40,000
• B)a debit to materials inventory for $44,000
• C)a credit to accounts payable for $44,000
• D)a debit to accounts payable for $40,000

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Definitions:

Cost Of Capital

The return rate that a company must earn on its investment projects to maintain its market value and attract funds.

Investment Risks

The possibility of losing some or all the original investment, which can arise from various sources including market volatility, inflation, and default.

Free Cash Flow

The amount of cash generated by a company after accounting for capital expenditures, available for distribution among shareholders, debt repayment, or reinvestment.

Proxy-Imperfect

A substitute measure used in analysis or calculation that does not accurately represent the intended variable.