ECONOMICS

Detailed explanation-1: -Materials are transferred from the storeroom to the factory in response to materials requisitions. Factory overhead is applied to production using a predetermined overhead rate. Nonmanufacturing costs are generally classified into two categories: selling and administrative.

Detailed explanation-2: -A summary of the materials requisition is completed during a period serves as the basis for transferring the cost of materials from the controlling account in the general ledger to the controlling accounts for a work in process and finished goods.

Detailed explanation-3: -When goods are sold, their costs are transferred to the finished goods inventory. The statement is true as the cost of goods sold is debited when goods are sold, and since the finished goods are reduced as a result of the sale, the inventory is reduced with a credit entry.

Detailed explanation-4: -What is a Material Requisition Form? A material requisition form lists the items to be picked from inventory and used in the production process or in the provision of a service to a customer, usually for a specific job.

Detailed explanation-5: -Inventory turnover ratio = Cost of goods sold * 2 / (Beginning inventory + Final inventory)