Simon Manufacturing Company Uses a Predetermined Overhead Application Rate of $10

question 5

Multiple Choice

Simon Manufacturing Company uses a predetermined overhead application rate of $10 per direct labour hour. A review of Simon's accounting records for the year just ended discovered the following: Underapplied manufacturing overhead: $9,000
Actual manufacturing overhead: $400,000
Budgeted labour hours: 50,000
Simon's actual labour hours worked totaled:

• A)39,100
• B)40,000.
• C)40,900
• D)49,872
• E)50,000

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Definitions:

Net Income

The total earnings of a company after subtracting all expenses, taxes, and losses from total revenue.

Gross Profit

The difference between revenue and the cost of goods sold before deducting any selling, administrative, or other expenses.

Periodic Inventory System

An inventory system where inventory levels are updated at specific intervals rather than continuously, often requiring physical counts.

Cost of Goods Sold

Represents the direct costs attributable to the production of the goods sold by a company.