Minstrel Manufacturing Uses a Job Order Costing System

question 183

Multiple Choice

Minstrel Manufacturing uses a job order costing system. During one month, Minstrel purchased $198,000 of raw materials on credit; issued materials to production of $195,000 of which $30,000 were indirect. Minstrel incurred a factory payroll of $150,000, of which $40,000 was indirect labor. Minstrel uses a predetermined overhead rate of 150% of direct labor cost.
- The journal entry to record the issuance of materials to production is:

• A) Debit Raw Materials Inventory $195,000; credit Accounts Payable $195,000.
• B) Debit Raw Materials Inventory $195,000; credit Work in Process Inventory $195,000.
• C) Debit Finished Goods Inventory $195,000; credit Raw Materials Inventory $195,000.
• D) Debit Work in Process Inventory $165,000; debit Factory Overhead $30,000; credit Raw Materials Inventory $195,000.
• E) Debit Work in Process Inventory $195,000; credit Raw Materials Inventory $195,000.

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Definitions:

Sherman Act

A landmark U.S. antitrust law passed in 1890 that prohibits monopolistic business practices and encourages competition.

Monopoly

A market condition where a single company or entity exclusively controls a particular commodity or service, often leading to less competition and higher prices.

Public Regulation

The imposition of rules by the government aimed at influencing or controlling certain activities within the economy or society for the general welfare.

Natural Monopolists

Natural monopolists are entities that can provide a good or service at a lower cost than any potential competitor due to economies of scale, making a single provider more efficient than multiple competing ones.