Gia Machine Shop Uses a Predetermined Overhead Allocation Rate of $63.20

question 15

Multiple Choice

Gia Machine Shop uses a predetermined overhead allocation rate of $63.20 per direct labor hour. In January, Gia completed Job A23 which utilized 15 direct labor hours. Which of the following correctly describes the journal entry to allocate overhead to the job?

• A)Debit Finished Goods Inventory $948, credit Manufacturing Overhead $948
• B)Debit Manufacturing Overhead $63.20, credit Work-in-Process Inventory $63.20
• C)Debit Work-in-Process Inventory $948, credit Manufacturing Overhead $948
• D)Debit Cost of Goods Sold $63.20, credit Finished Goods Inventory $63.20

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Definitions:

Fixed Asset

A long-term tangible piece of property that a firm owns and uses in its operations to generate income.

Rent Expense

The cost incurred for leasing premises or equipment for business operations, typically recognized as an expense.

Liability

A financial obligation or amount owed by a business to another entity, typically categorized as current or long-term.

Residual Value

An asset's expected monetary value at the end of its operational lifespan.