Q1: At the end of an accounting period, if a manufacturing company determines that its factory overhead was underapplied by an immaterial amount, the company should:

a.Close the underapplied overhead amount to Finished Goods Inventory.

b.Close the underapplied overhead amount to Cost of Goods Sold.

c.Do nothing, since the underapplied amount is not material.

d.Carry the underapplied overhead amount to the income statement as "Other Expense".

e.Carry the underapplied overhead amount over to the next accounting period.

Q2: Direct materials and direct labor production costs are recorded directly into the Work in Process Inventory account. All other production costs must first be recorded in what account?

a.Factory Overhead.

b.Raw Materials Inventory.

c.Work in Process Inventory.

d.Cost of Goods Sold.

e.General and Administrative Expense.