Sparkling Pools Provides $1,000 of Pool Maintenance Services During July

question 23

Multiple Choice

Sparkling Pools provides $1,000 of pool maintenance services during July and collects payment in August.The company performs $1,600 of pool maintenance services during July that were paid for in June.The company accepts an order to perform $500 of pool maintenance services in August and will be paid in the same month.Revenue should be credited for:

• A)$1,600 in June,$1,000 in July,and $500 in August.
• B)$1,600 in June,$0 in July,and $1,500 in August.
• C)$0 in June,$1,600 in July,and $1,500 in August.
• D)$0 in June,$2,600 in July,and $500 in August.

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Definitions:

Fixed Manufacturing Overhead

Consists of manufacturing costs that do not vary with the level of production, such as salaries of supervisors and rent of the factory.

Predetermined Overhead Rate

An estimated overhead rate used to assign expected overhead costs to individual units of production, aiding in budgeting and cost control.

Fixed Manufacturing Expenses

Costs that do not vary with the level of production, such as rent, salaries, and equipment depreciation.

Selling and Administrative Expenses

Expenses related to the sale of products or services and the general administration of a business, excluding production costs.