Question

19. In a job-order costing system, the incurrence of indirect materials costs would usually be recorded as a debit to: A. Manufacturing Overhead B. Finished Goods C. Work in Process D. Cost of Goods Sold E. Salaries & Wages Payable 20. DuCo manufactures and sells motorcycles. In order to make assembly of the motorcycles faster and easier, some of the metal parts are coated with lubricants. How should the cost of these lubricants be classified? Direct Material Fixed Period Yes Yes No Yes No Yes No No No Yes No No No Yes Yes 21. Gross margin can be defined as: A) the amount of sales revenue necessary to cover costs of goods sold B) sales revenue minus fixed expenses. C) the amount of sales revenue necessary to cover fixed and variable expenses. D) sales revenue minus variable expenses E) none of these

Answer 1

19)Correct option is "A" -Manufacturing overhead

The entry to record :Debit manufacturing overhead and credit Raw material inventory .

20)Correct option is "E"

Use of Lubricant is a indirect material in manufacturing of motorcycles as such cost is incurred not to make motorcycles but to make assembly of parts easier . (Not a direct material )

Use of lubricants varies with number of parts coated each time thus it is a variable overhead cost (not fixed)

Since Lubricants are used in manufacturing of product thus it is a product cost and not a period cost.

21)correct option is "A"

Gross margin =sales revenue -cost of goods sold