The Entry to Record the Use of Direct Materials in Production

question 160

Multiple Choice

The entry to record the use of direct materials in production would include a

• A) debit to WIP inventory.
• B) debit to raw materials inventory.
• C) debit to finished goods inventory.
• D) credit to finished goods inventory.

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Definitions:

Operating Costs

Expenses associated with the day-to-day operations of a business, including rent, utilities, payroll, and raw materials.

Useful Life

The estimated period that an asset is expected to be usable for its intended purpose, impacting depreciation calculations.

Variable Cost Concept

The principle that costs vary in proportion to the level of production or activity. These costs increase as production increases and decrease as production decreases.

Markup Percentage

The amount by which the cost of a product is increased to arrive at the selling price, expressed as a percentage of the cost.