Beans Corporation Uses a Job-Order Costing System with a Single

question 151

Multiple Choice

Beans Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $162,000, variable manufacturing overhead of $2.80 per direct labor-hour, and 60,000 direct labor-hours. Recently, Job K818 was completed with the following characteristics: The predetermined overhead rate is closest to:

• A) $5.50 per direct labor-hour
• B) $8.30 per direct labor-hour
• C) $2.80 per direct labor-hour
• D) $2.70 per direct labor-hour

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Definitions:

Factory Overhead

Factory overhead encompasses all the indirect costs associated with manufacturing, such as utilities, maintenance, and salaries of non-direct labor.

Assemblers Wages

The compensation paid to workers who are responsible for piecing together components to form a finished product.

Direct Labor

The cost of wages for employees who are directly involved in the production of goods or services, considered a variable cost in financial accounting.

Direct Materials

This refers to raw materials that are directly incorporated into a finished product during the manufacturing process.