Mesa CorpAllocates Overhead to Production on the Basis of Direct Labor

question 187

Multiple Choice

Mesa Corp.allocates overhead to production on the basis of direct labor costs.Mesa's total estimated overhead is $450,000 and estimated direct labor is $180,000.Determine the amount of overhead applied to a job which used $20,000 of direct labor.

• A)$8,000.
• B)$20,000.
• C)$70,000.
• D)$50,000.
• E)$90,000.

---

Definitions:

Historical Cost

The original monetary value of an asset or liability, reflecting its purchase price or value at the time of acquisition, not adjusted for inflation or market changes.

Discounted Present Values

The calculation of the present value of an expected future cash flow using a specific discount rate.

Net Property

This term typically refers to the net book value of a company's property, plant, and equipment (PP&E) after accounting for depreciation and amortization.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset since it was acquired, reflecting its loss of value over time.