Wilson Company Applies Overhead Using Machine Hours as the Allocation

question 4

Multiple Choice

Wilson Company applies overhead using machine hours as the allocation base, at a rate of $15 per machine hour.Job 44 requires $320 worth of material, 11 hours of labor at $16 per hour and 9 machine hours.What is the cost of job 44?

• A)$496
• B)$135
• C)$661
• D)$631

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Definitions:

Inflationary Gap

This term reflects the difference between the actual output of an economy and the maximum potential output it could achieve with full employment, often indicating inflation pressures.

Equilibrium GDP

The level of Gross Domestic Product at which the total quantity of goods and services produced equals the total quantity of goods and services purchased.

Deflationary Gap

A condition in which aggregate demand is lower than the aggregate supply potentially leading to deflation.

Full Employment GDP

The total value of all goods and services produced when the economy is operating at full employment, with no cyclical unemployment.