Savannah Factory Applies Manufacturing Overhead Based on Direct Labor Cost

question 16

Multiple Choice

Savannah Factory applies manufacturing overhead based on direct labor cost.Information concerning manufacturing overhead and labor for August follows: $\begin{array}{lrr}&\text { Estimated }&\text { Actual }\\\text { Overhead cost } & \$ 174,000 & \$ 171,100 \\\text { Direct labor hours } & 5,800 & 5,900 \\\text { Direct labor cost } & \$ 87,000 & \$ 89,975\end{array}$ How much overhead should be applied in total during August?

• A)$179,950
• B)$174,000
• C)$177,000
• D)$171,100

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Definitions:

Profit Components

Specific elements that contribute to a company's profit, including revenue, cost of goods sold, operating expenses, and other income or costs.

Manager Responsibility

The obligation of managers to plan, control, and make decisions that align with the strategic objectives and financial performance of the organization.

Transfer Pricing

Pricing transactions internally within a company, especially across borders, for goods, services, or use of property between related entities.

Profit Centres

Profit centres are separate business units or departments within a company that are responsible for generating their own revenue and profit, evaluated on their financial performance.