Allan Company Manufactures Overalls -Refer to the Figure

question 109

Multiple Choice

Allan Company manufactures overalls. During the year, it manufactured 125,000 overalls, using 2.9 hours of direct labour at a rate of $6.25 per hour. The materials and labour standards for manufacturing the overalls are as follows:
Allan required 600,000 m at $1.95 per metre to make the 125,000 overalls.
$\begin{array}{lll}\text {Direct materials ( \( 5 \mathrm{~m} \) of denim \( (012 \) per metre) }&\$10\\\text { Direct labour (3 hours \( @ \$ 6 \) per hour) }&18\\\end{array}$

-Refer to the Figure.What is the entry to record the issuance and usage of materials?

• A)Work in Process 1,170,000Materials Usage Variance 48,750Materials 1,218,750
• B)Work in Process 1,200,000Materials Usage Variance 50,000Materials 1,250,000
• C)Work in Process 1,218,750Materials Usage Variance 48,750Materials 1,170,000
• D)Work in Process 1,250,000Materials Usage Variance 50,000Materials 1,200,000

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Definitions:

Note Receivable

A financial asset representing a written promise for a debtor to pay a specified sum of money to the creditor on a determined future date or on demand.

Dishonored Note

A promissory note that has not been paid by the issuer at the time of its due date.

Fully Paid

Fully Paid denotes a status where all required payments for a service or product have been completed, with no outstanding amounts due.

Allowance Account

An accounting provision used to create a reserve for accounts receivable that may not be collected in full.