Ron's Desk Company Expects to Sell $10,000,000 Worth of Desks

question 45

Multiple Choice

Ron's Desk Company expects to sell $10,000,000 worth of desks and to produce $10,500,000 worth of desks in the coming year.The company purchases $100,000 of new equipment during the year.Sales for the year turn out to be $9,000,000.Actual investment by Ron's Desk Company equals _______ and planned investment equals _______.

• A) $1,000,000;$100,000
• B) $1,500,000;$100,000
• C) $1,500,000;$600,000
• D) $1,600,000;$100,000
• E) $1,600,000;$600,000

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Definitions:

Direct Labour Hours

The total hours worked by employees directly involved in the manufacturing process, usually influencing variable expenses.

T Accounts

A visual representation used in accounting to depict debits and credits for individual accounts, shaped like the letter "T".

Direct Materials

Direct materials are raw materials that are directly incorporated into and can be easily tracked to the finished product.

Work in Process

Inventory items that are in the production process but are not yet completed.