Coat-All Paint Company Used a Predetermined Overhead Allocation Rate to Allocate

question 12

Multiple Choice

Coat-All Paint Company used a predetermined overhead allocation rate to allocate $80,000 and $50,000 of indirect costs to the Coloring Department and the Mixing Department,respectively.The journal entry to record the allocation of overhead costs to the Coloring Department is ________.Process costing is used.

• A) debit Manufacturing Overhead, $80,000; credit Work-in-Process Inventory-Mixing, $80,000
• B) debit Work-in-Process Inventory-Coloring, $80,000; credit Manufacturing Overhead, $80,000
• C) debit Work-in-Process Inventory-Coloring, $50,000; credit Manufacturing Overhead, $50,000
• D) debit Manufacturing Overhead, $50,000; credit Work-in-Process Inventory-Mixing, $50,000

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Definitions:

Capacity Utilization

A measure of how effectively an entity is using its production or operational capacity.

Budgeted Factory Overhead

The expected or estimated overhead costs for a factory within a certain period, typically used for planning and control purposes.

Budgeted Fixed Overhead

The predetermined estimate of the total fixed costs required to produce a specific amount of output over a fixed period.

Budgeted Variable Overhead

Estimated costs that vary with production volume, such as utilities or raw materials, not directly tied to labor or capital.