I think the better one is D.
Agree, since two minds work better than one.
Answer:
PEZ Candy Inc.
1. PEZ Candy Inc. would be more likely to use process costing for the manufacture of its PEZ candies.
The reason is that the manufacturing of candies involves continuous processing of materials that results into candies. The processes are not customizable for separate orders.
2. PEZ Candy Inc. would incur these types of costs in the manufacture of its PEZ candies:
a. Direct material = sugar
b. Direct labor = wages of factory workers
c. Manufacturing overhead = utilities expenses
i. indirect materials = cleaning supplies
ii. indirect labor = factory supervisor's salary
iii. other manufacturing overhead = depreciation expense of factory equipment
3. PEZ Candy Inc. would be more likely to use job costing to calculate the cost of one particular birthday party hosted at the PEZ Visitor Center. The reason is that it is a specific event. It does not involve a continuous process.
Explanation:
a) Data and Calculations:
Materials for PEZ candy include:
Direct materials:
Sugar (95%)
Fruit flavoring
Coloring
Corn syrup
Product = PEZ candies
Services: customized birthday parties
Answer:
C. Insurance expense will increase $2,250
Explanation:
On April 1 2016, the following journal entry will be recorded in respect of the premium paid on a one year insurance policy:
Debit Credit
Prepaid Insurance $3,000
Cash $3,000
The year end given in this question is December 31, 2016 and the insurance premium is for one year and since the insurance premium is paid on April 1, 2016, therefore, only expense in respect of 9 months i.e. from April 1, 2016 to the December 31, 2016 will be recognised in this year. Remaining expense of three months will be recognised in the Year ended December 31,2017.
The following Journal entry will be recorded in respect of insurance expense in accounts on December 31, 2016.
Debit Credit
Insurance expense(3,000*9/12) 2,250
Prepaid Insurance 2,250
So the answer will be C. Insurance expense will increase $2,250
This is called a "Sponsorship"
