The First Adjusting Entry for Merchandise Inventory with the Periodic

question 16

True/False

The first adjusting entry for merchandise inventory with the periodic inventory system is a credit to Merchandise Inventory and a debit to Income Summary.

---

Definitions:

Activity Level

A measure of the volume of production or operations, often influencing variable costs and capacity planning.

Fixed Manufacturing Overhead

The consistent, non-variable costs incurred during the manufacturing process, not directly tied to production levels.

Volume Variance

The difference between the budgeted and actual volume of production, affecting fixed costs allocation.

Machine-Hours

A unit of measure representing the operation time of a machine, often used in allocating manufacturing costs based on machine usage.