Johnson Production Company Uses Just-In-Time Production and Accounting Methods

question 11

Multiple Choice

Johnson Production Company uses just-in-time production and accounting methods. On June 1, Johnson paid direct labor costs of $5,000 in cash. Which of the following journal entries correctly records this transaction?

• A) Debit $5,000 to Cash, credit $5,000 to Conversion costs.
• B) Debit $5,000 to Conversion costs, credit $5,000 to Cash.
• C) Debit $5,000 to Manufacturing overhead, credit $5,000 to Cash.
• D) Debit $5,000 to Raw and in-process inventory, credit $5,000 to Cash.

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Definitions:

Monopoly

A market structure where a single seller controls the entire market for a product or service, having significant market power.

Profit

The financial gain derived from the difference between the revenue earned from selling a good or service and the costs associated with its production and sale.

Marginal Revenue

The additional revenue that is gained from selling one more unit of a good or service.

Marginal Revenue

The additional income earned from the sale of one more unit of a product or service.