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

question 338

Multiple Choice

Lupo Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data: Recently, Job T687 was completed with the following characteristics:
The predetermined overhead rate is closest to:

• A) $12.60 per machine-hour
• B) $10.50 per machine-hour
• C) $8.40 per machine-hour
• D) $2.10 per machine-hour

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Definitions:

Job-Order Costing System

An accounting method that accumulates costs for individual units or small batches of production, often used for custom orders.

Direct Materials

Raw materials that are directly traceable to the production of a specific product.

Indirect Labor

Indirect labor involves workers who support the production process but do not directly work on the product, such as maintenance staff.

Direct Labor

The cost of wages for employees who directly manufacture or produce goods.