Dowan Company Uses a Predetermined Overhead Rate Based on Direct

question 63

Multiple Choice

Dowan Company uses a predetermined overhead rate based on direct labour hours to apply manufacturing overhead to jobs. Last year Dowan Company incurred $156,600 in actual manufacturing overhead cost. The Manufacturing Overhead account showed that overhead was underapplied by $12,600 for the year. If the predetermined overhead rate is $6.00 per direct labour hour, how many hours did the company work during the year?

• A)28,200 hours.
• B)25,000 hours.
• C)26,000 hours.
• D)24,000 hours.

Learn how to determine the ending balance in various accounts including raw materials, WIP inventory, finished goods, and PP&E net.

Grasp the financial implications of using a standard cost system on inventory valuation.

Comprehend the role of budgeting in setting standard costs.

Understand the purpose and importance of gathering meaningful accounting metrics for assessing employee or unit performance within a company.

---

Definitions:

Accounts Receivable

This term refers to the money that is owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Credit Sales

Sales made by a business where payment is delayed, allowing the buyer to purchase goods or services on credit.

Month of Sale

The specific month in which a sale transaction was completed or recognized for accounting or reporting purposes.

Collections

Collections refer to the process of pursuing payments of debts owed by individuals or businesses, often conducted by dedicated departments or external agencies.