Valor Company Is Planning to Implement an Activity-Based Costing"ABC"system to Apply

question 46

Short Answer

Valor company is planning to implement an activity-based costing"ABC"system to apply overhead costs to products.Three activities were identified and rates were calculated for each activity.
$\begin{array}{ll}\text { Purchase requisitions: } & \$ 5 \text { per requisition processed } \\\text { Production setup: } & \$ 20 \text { per setup } \\\text { Quality control: } & \$ 30 \text { per inspection }\end{array}$
Assume 600 purchase requisitions were processed,1,200 production setups were performed,and 300 products were inspected for the year.Which of the following journal entries would be made by Valor to record the application of overhead?
a.
$\begin{array}{llr} \text { Work in Process Inventory } &36,000\\ \text { Manufacturing Overhead} &&36,000\\\end{array}$

b.
$\begin{array}{llr} \text { Manufacturing Overhead }&36,000\\ \text { Work in Process Inventory } &&36,000\\\end{array}$

c.
$\begin{array}{llr} \text { Manufacturing Overhead } &36,000\\ \text { Finished Goods Inventory } &&36,000\\\end{array}$

d.
$\begin{array}{llr} \text { Finished Goods Inventory } &36,000\\ \text { Work in Process Inventory} &&36,000\\\end{array}$

e. $\text {None of the answer choices is correct.}$

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