Use This Information to Answer the Following Question

question 112

Multiple Choice

Use this information to answer the following question. The trial balance for Sanchez Company appears as follows:
If on December 31, 2010, the insurance still unexpired amounted to $20, the adjusting entry would contain a

• A) debit to Prepaid Insurance for $30.
• B) credit to Prepaid Insurance for $30
• C) debit to Insurance Expense for $20.
• D) credit to Prepaid Insurance for $20.

---

Definitions:

Variable Manufacturing Overhead

Costs of manufacturing that vary directly with the level of production, such as utilities for the manufacturing plant.

Break-even Sales

The amount of revenue needed to cover all fixed and variable costs, resulting in neither profit nor loss.

Southern Division

A geographical or organizational subsection of a company that operates in the southern region.

Fixed Expenses

Costs that remain constant in total regardless of changes in the level of activity or volume of output.