Mesa CorpAllocates Overhead to Production on the Basis of Direct Labor

question 38

Multiple Choice

Mesa Corp.allocates overhead to production on the basis of direct labor costs.Mesa's total estimated overhead is $450,000 and estimated direct labor is $180,000.Determine the amount of overhead to be allocated to finished goods inventory if there is $20,000 of total direct labor cost in the jobs in the finished goods inventory.

• A)$8,000.
• B)$20,000.
• C)$70,000.
• D)$50,000.
• E)$90,000.

---

Definitions:

Catering Supplies

Items and materials used in the provision of catering services, including food, utensils, and decorations.

Spending Variance

Difference between the planned budget and the actual expenditure, indicating over- or under-spending.

Measures of Activity

Metrics and indicators used to evaluate the level of activity, productivity, or performance in various aspects of an organization's operations.

Cost Formula

This is an equation used to predict the total cost associated with a certain level of activity or production volume.