Asked by Darren Szack on Jul 25, 2024
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The Work in Process Inventory account of a manufacturing company has a $4,400 debit balance.The company applies overhead using direct labor cost.The cost sheet of the only job still in process shows direct material cost of $2,000 and direct labor cost of $800.Therefore,the company's predetermined overhead rate is:
A) 40% of direct labor cost.
B) 50% of direct labor cost.
C) 80% of direct labor cost.
D) 200% of direct labor cost.
E) 300% of direct labor cost.
Work in Process Inventory
Goods in manufacturing that are partially completed, situated between raw materials and finished products.
Direct Material Cost
The cost of raw materials that can be directly attributed to the goods being produced.
Predetermined Overhead Rate
A rate used in costing to allocate indirect costs to products or services based on a predetermined formula.
- Understand the significance and calculation of the predetermined overhead rate.
Verified Answer
Learning Objectives
- Understand the significance and calculation of the predetermined overhead rate.
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