A Firm That Has Implemented JIT Had the Following Transactions

question 141

Multiple Choice

A firm that has implemented JIT had the following transactions: What will be the entry to record material purchases using the traditional approach?

• A) Materials and In Process Inventory 40,000 Accounts Payable 40,000
• B) Materials Inventory 40,000 Accounts Payable 40,000
• C) Accounts Payable 40,000 Materials and In Process Inventory 40,000
• D) Accounts Payable 40,000 Materials Inventory 40,000

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Definitions:

Overapplied

Overapplied refers to the situation where the amount of overhead allocated to products is more than the actual overhead incurred.

Underapplied

A situation where the allocated costs of production are less than the actual costs incurred, leading to a discrepancy in accounting records.

Overapplied

A situation where the allocated manufacturing overhead costs exceed the actual manufacturing overhead costs incurred.

Denominator Activity

The total base activity used to allocate overhead costs in cost accounting, such as total direct labor hours or machine hours available.