Portside Watercraft Uses a Job Order Costing System

question 126

Multiple Choice

Portside Watercraft uses a job order costing system.During one month Portside purchased $173,000 of raw materials on credit; issued materials to production of $164,000,of which $24,000 were indirect.Portside incurred a factory payroll cost of $95,000,of which $25,000 was indirect labor.Portside uses a predetermined overhead rate of 170% of direct labor cost.
-The journal entry to record the allocation of factory wages to production is:

• A)Debit Work in Process Inventory $95,000; credit Factory Wages Payable $95,000.
• B)Debit Work in Process Inventory $95,000; credit Cash $95,000.
• C)Debit Factory Wages Payable $95,000; credit Cash $95,000.
• D)Debit Work in Process Inventory $70,000; debit Factory Overhead $25,000; credit Factory Wages Payable $95,000.
• E)Debit Work in Process Inventory $70,000; debit Factory Overhead $25,000; credit Cash $95,000.

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Definitions:

Profit-maximizing Output

The peak production point for a firm where it attains its greatest possible profit, characterized by the equality of marginal cost and marginal revenue.

Marginal Cost

The additional cost incurred in producing one more unit of a good or service, crucial for making production and pricing decisions.

Fixed Cost

Fixed cost is a business expense that remains constant regardless of changes in the level of production or sales volumes, such as rent or salaries.

Lawn-mowing

The act of cutting the grass of a lawn to maintain a specified height and neat appearance.