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Raw materials build a closet in the factory for $200, shelving in the sales offices for $150 and braces in the administrative area for $50. What is debited to Factory Overhead?
A$400
B$350
C$250
D$200
Answer & Solution
Correct answer: D. $200
1. Factory Overhead records only factory expenses, never selling or administrative costs.
2. The closet is inside the factory, so its $200 of materials is debited to Factory Overhead.
3. Shelving for the salespeople is a selling expense of $150 and the braces in the administrative area are an administrative expense of $50.
4. Materials is credited for the full $400, but that total is split across three expense accounts.
5. $400 would be right only if the whole requisition had stayed inside the factory.
_Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 2.2.1 Selling and Administrative Expenses_
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