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A mixing department requisitions $4,600 of direct materials and $400 of indirect materials. How is the $400 recorded?
ADebited to Work in Process for Mixing
BCredited to Work in Process for Mixing
CDebited to Cost of Goods Sold directly
DDebited to Factory Overhead for Mixing
Answer & Solution
Correct answer: D. Debited to Factory Overhead for Mixing
1. One requisition can carry both direct and indirect materials, and they part company on the debit side.
2. Direct materials of $4,600 are debited to Work in Process for the mixing department.
3. Indirect materials of $400 are debited to Factory Overhead for the mixing department.
4. Materials is credited for the combined $5,000, since that is what left the stockroom.
_Source: Jonick, Principles of Managerial Accounting (UNG Press, CC BY-SA 4.0), section 3.2 Process Costing Transactions for a Manufacturing Company_
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