Page 763 - Accounting Principles (A Business Perspective)

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b. A merchandiser uses Merchandise Inventory and Cost of Goods Available for Sale, whereas a manufacturer
uses Finished Goods Inventory and Cost of Goods Available for Sale.
d. All of the answers are true.

d. Both (a) and (c) are advantages of using a predetermined overhead rate.
USD360,000USD90,000
c. USD15= .
30,000 machine−hours
a.

Manufacturing overhead 22,500
Various accounts 22,500
Work in process inventory 21,000
Manufacturing overhead 21,000
Note the predetermined overhead rate times the actual activity is USD 0.60 X 35,000 machine-hours = USD
21,000.

Accounting Principles: A Business Perspective 764 A Global Text