During the Month of August, Ranson Productions Applied Overhead to Jobs

question 39

Multiple Choice

During the month of August, Ranson Productions applied overhead to jobs using an overhead rate of $0.60 per dollar of direct labor. Actual direct labor in August was 12,000 hours at $15.00 per hour, for a total of $180,000. Estimated overhead in August was $111,600. Actual overhead was composed of the following items $$\begin{array} { l r } \text { Indirect materials } & \$ 16,400 \\\text { Indirect labor } & 22,000 \\\text { Utilities } & 24,500 \\\text { Depreciation } & 38,700 \\\text { Repair expense } & 13,500 \\\text { Total } & \$ 115,100\end{array}$$ How much overhead was applied during the year by Ranson Productions?

• A) $108,000
• B) $115,100
• C) $111,600
• D) More information is needed to answer

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Definitions:

Mortgage Bonds

Bonds secured by a mortgage on a property, providing bondholders a claim against the property in case of default.

Debentures

A type of debt instrument that is not secured by physical assets or collateral but backed only by the general creditworthiness and reputation of the issuer.

Interest Expense

The cost incurred by an entity for borrowed funds, often quoted as an annual rate, and is typically deductible for tax purposes.

Sinking Fund

A reserve fund established by a company to repay debt or replace a preferred stock at a future date through periodic payments.