Prather Corporation Uses a Job-Order Costing System with a Single

question 66

Multiple Choice

Prather Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on the following data: Recently, Job P513 was completed with the following characteristics:
The predetermined overhead rate is closest to:

• A) $13.30 per direct labor-hour
• B) $3.80 per direct labor-hour
• C) $9.50 per direct labor-hour
• D) $5.70 per direct labor-hour

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Definitions:

Prepaid Expense

Expenses paid in advance for goods or services to be received in the future, recorded as assets on the balance sheet until they are actually consumed.

Insurance Expense

The cost recognized in the accounting period related to the premiums paid for insurance policies.

Retained Earnings

Profits that a company keeps after dividends are paid to shareholders, used for reinvestment in the business or to pay off debt.

Closing Entry

A closing entry is an accounting procedure used at the end of an accounting period to transfer the balances from temporary accounts to permanent ones, thus preparing the accounts for the next period.