Star Company's Accountants Estimate Total Overhead for Each Month Will

question 88

Multiple Choice

Star Company's accountants estimate total overhead for each month will be $64,000. They will allocate overhead on the basis of direct labour cost. During the current month, three jobs were worked on: $\begin{array}{llll}&\text { Job 745 } & \text { Job 746 } & \underline{\text { Job 747 }}\\\text { Direct material } & \$ 36,000 & \$ 56,000 & \$ 24,000 \\\text { Direct labour } & \$ 56,000 & \$ 72,000 & \$ 40,000\end{array}$ Job 745 was completed and sold, Job 746 was completed and Job 747 is still in process. Budgeted direct labour cost for the month was $160,000 and actual overhead was $65,800.
Assuming overhead was $2,000 underapplied and that this amount is considered material, the balance of work in process after allocation of the underapplied overhead based on overhead charged to the accounts during the period is:

• A) $115,073
• B) $80,456
• C) $113,727
• D) $79,544

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Definitions:

Par Value

The face value of a bond or stock as stated by the issuing company, unrelated to its market value.

Market Value

The market price at which an asset or service is currently available for trading.

Inflation

The rate at which the general level of prices for goods and services rises, eroding purchasing power over time.

Bond Prices

The market price at which a bond is currently trading, influenced by interest rates, the bond's credit rating, and other market factors.