Baxter Accounting Services Estimates for Next Year Revenues of $3,000,000

question 54

Multiple Choice

Baxter Accounting Services estimates for next year revenues of $3,000,000, direct labor of $600,000, and overhead of $1,050,000. Under traditional costing, overhead is applied to audit jobs using the rate of

• A) 35% of revenues.
• B) 20% of revenues.
• C) 56% of direct labor.
• D) 175% of direct labor.

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