Midtown,Inc

question 127

Multiple Choice

Midtown,Inc.uses a predetermined overhead allocation rate of $68 per direct labor hour.In January,the company completed Job A23 which utilized 24 direct labor hours.Which of the following correctly describes the journal entry to allocate overhead to the job?

• A) debit Finished Goods Inventory $1,632 and credit Manufacturing Overhead $1,632
• B) debit Manufacturing Overhead $68 and credit Work-in-Process Inventory $68
• C) debit Work-in-Process Inventory $1,632 and credit Manufacturing Overhead $1,632
• D) debit Cost of Goods Sold $68 and credit Finished Goods Inventory $68

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Definitions:

Perpetuity

A type of financial annuity that generates an infinite series of equal payments over an indefinable period of time.

Dividends

Cash payouts made by a corporation to its equity holders, usually stemming from the corporate profits.

Discount Rate

The interest rate used to discount future cash flows to their present value, essentially reflecting the opportunity cost of capital.

Present Value

The up-to-date valuation of a future financial sum or cash flow sequence, considering a determined rate of return.