Kayak Company Uses a Job Order Costing System and Allocates

question 48

Multiple Choice

Kayak Company uses a job order costing system and allocates its overhead on the basis of direct labor costs.Kayak Company's production costs for the year were: direct labor,$30,000;direct materials,$50,000;and factory overhead applied $6,000.The overhead application rate was:

• A)5.0%.
• B)12.0%.
• C)20.0%.
• D)500.0%.
• E)16.7%.

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Definitions:

Liquidation

The process of closing a business, selling its assets, and using the proceeds to pay off its debts.

Reorganization

A process aimed at restructuring a company's operations, structure, or finances with the goal of increasing efficiency or preparing for growth, often to avoid bankruptcy.

Order for Relief

A court order that occurs when a petition for bankruptcy is approved, protecting the petitioner from creditors and potentially leading to a debt reorganization plan.

Debtor in Possession

A debtor in possession is a status in bankruptcy proceedings where a debtor continues to control property and operate its business under the oversight of the court.