Andrew Industries Purchased $165,000 of Raw Materials on Account During

question 74

Multiple Choice

Andrew Industries purchased $165,000 of raw materials on account during the month of March. The beginning Raw Materials Inventory balance was $22,000, and the materials used to complete jobs during the month were $141,000 of direct materials and $13,000 of indirect materials.
- What journal entry should Andrew use to account for direct materials used in March:

• A) Debit Finished Goods Inventory $22,000; credit Raw Materials Inventory $22,000.
• B) Debit Work in Process Inventory $141,000; credit Accounts Payable $141,000.
• C) Debit Work in Process Inventory $141,000; credit Raw Materials Inventory $141,000.
• D) Debit Raw Materials Inventory $153,000; credit Work in Process Inventory $153,000.
• E) Debit Raw Materials Inventory $141,000; credit Accounts Payable $141,000.

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Definitions:

Short-Run Supply

The quantity of goods a firm is willing and able to supply to the market at different price levels in a short-term period, typically assuming some inputs are fixed.

Average Fixed Cost

The fixed costs of production (those that do not change with the level of output) divided by the quantity of output produced. It decreases as production increases.

Total Product

The total quantity of output produced by a firm over a given period as a result of inputs.

Economic Profit

The divergence between an organization's total income and its comprehensive costs, incorporating both overt and implicit expenses.