A Manufacturing Company Applies Factory Overhead Based on Direct Labor

question 9

Multiple Choice

A manufacturing company applies factory overhead based on direct labor hours. At the beginning of the year, it estimated that factory overhead costs would be $360,000 and direct labor hours would be 30,000. Actual manufacturing overhead costs incurred were $377,200, and actual direct labor hours were 36,000. The entry to apply the factory overhead costs for the year would include a

• A) debit to factory overhead for $360,000.
• B) credit to factory overhead for $432,000.
• C) debit to factory overhead for $377,200.
• D) credit to factory overhead for $360,000.

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Definitions:

Production Process

The steps and methods involved in the creation of goods and services, from the procurement of raw materials to the final product.

Added Profit

Additional earnings generated from an action or operation beyond the original or expected profit.

Modern View of Technological Advance

This refers to the contemporary understanding that technological progress is a key driver of economic growth, influencing productivity, business models, and societal changes.

Profit Incentives

Motivations for businesses and individuals to increase their earnings and achieve financial gains, often driving economic activities and innovation.