Hammett Has a Single Production Department, and Uses a Process-Costing

question 27

Multiple Choice

Hammett has a single production department, and uses a process-costing system. The balance in its Work-in-Process account on January 1 was $68,000. The account was charged with direct materials, direct labor, and manufacturing overhead of $450,000 throughout the year. If a review of the accounting records determined that $86,000 of goods were still in production at year-end, Hammett should make a journal entry on December 31 that includes:

• A) a debit to Cost of Goods Sold for $432,000.
• B) a debit to Finished-Goods Inventory for $432,000.
• C) a debit to Work-in-Process Inventory for $432,000.
• D) a debit to Finished-Goods Inventory for $86,000.
• E) a credit to Work-in-Process Inventory for $86,000.

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Definitions:

Constrained Resource

A limited resource in a production or project management environment that can restrict output or throughput.

Current Profitability

A measure of a company's financial performance in the short term, often evaluating the income it generates over a recent period against the expenses.

Intermediate Products

Goods that are produced in one manufacturing process but are used as inputs in another, not yet final products.

Common Input

A resource, such as raw materials or labor, that is shared among different processes or production lines within manufacturing or service delivery.