Answer the Following Questions Using the Information Below:
Games R

question 82

Multiple Choice

Answer the following questions using the information below:
Games R Us manufactures various games. For March, there were no beginning inventories of direct materials and no beginning or ending work in process. Conversion costs is the only indirect manufacturing cost category currently used. Journal entries are recorded when materials are purchased and when conversion costs are allocated under backflush costing.
$\begin{array}{lr}\text { Conversion costs - March } & \$ 400,000 \\\text { Direct materials purchased - March } & \$ 1,070,000 \\\text { Units produced - March } & 58,800 \\\text { Units sold - March } & 41,800\end{array}$
-Which of the following entries properly records the cost of goods sold for the month?

• A) \(\begin{array} { l }
• \text {Finished Goods }&1,045,000 \\
• \text {Work in Process }&1,045,000 \\
• \end{array}\)
• B) \(\begin{array} { l }
• \text {Cost of Goods Sold }&1,045,000 \\
• \text { Finished Goods}&1,045,000 \\
• \end{array}\)
• C) \(\begin{array} { l }
• \text {Finished Goods }&1,045,000 \\
• \text { Cost of Goods Sold}&1,045,000 \\
• \end{array}\)
• D) \(\begin{array} { l }
• \text {Cost of Goods Sold }&1,045,000 \\ \text {Work in Process }& 1,045,000\\
• \end{array}\)

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Definitions:

Direct Labor Dollars

The total cost of wages paid to employees who are directly involved in the manufacturing process.

Absorption Cost

A comprehensive approach to product costing that includes all types of manufacturing costs: direct materials, direct labor, and both fixed and variable manufacturing overhead.

Overhead Absorption Rate

The rate at which indirect costs are allocated to produced goods or services.

ABC System

Activity-Based Costing; a method of assigning overhead and indirect costs to specific products or projects, based on their usage of activities.