The Work in Process Inventory Account of a Manufacturing Company

question 90

Multiple Choice

The Work in Process inventory account of a manufacturing company shows a balance of $2,400 at the end of an accounting period.The job cost sheets of the two uncompleted jobs show charges of $400 and $200 for direct materials,and charges of $300 and $500 for direct labour.From this information,it appears that the company is using a predetermined overhead rate,as a percentage of direct labour costs,of:

• A) 80%.
• B) 125%.
• C) 240%.
• D) 300%.

Comprehend the reasons for using applied overhead in cost determination and its implications.

Distinguish between direct and indirect labor costs and their representation on a timesheet.

Understand the principles of process costing and its application to multi-step manufacturing processes.

Grasp the concept of responsibility accounting and the role of department managers in controlling costs.

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Definitions:

Specialized Skills

Specific expertise or abilities acquired through education or training, enhancing an individual's performance in a particular job.

Cyclical Unemployment

Employment that fluctuates with the business cycle, increasing during economic downturns and decreasing during periods of economic growth.

Economy

The system by which a country's money and goods are produced, distributed, and consumed.

Boom

A period of significant economic growth, expansion, and increased productivity, often characterized by high demand, low unemployment, and rising prices.