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A building repair invoice totals $200. Half is a factory expense, $60 is a selling expense and $40 is an administrative expense. What amount goes to Factory Overhead?
A$100
B$140
C$60
D$200
Answer & Solution
Correct answer: A. $100
1. The invoice is $200 in total and is split across the factory, selling and administrative areas.
2. Half of $200 is the factory share, which is $100 debited to Factory Overhead.
3. Selling Expenses takes $60 and Administrative Expenses takes $40, and those two plus $100 rebuild the $200.
4. Accounts Payable is credited for the full $200 because the whole invoice is owed.
_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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