Fisher Corporation Uses a Predetermined Overhead Rate Based on Direct

question 201

Multiple Choice

Fisher Corporation uses a predetermined overhead rate based on direct labor cost to apply manufacturing overhead to jobs.The following information about Fisher Corporation's Work in Process inventory account has been provided for the month of May:
During the month,Fisher Corporation's Work in Process inventory account was credited for $120,500,which represented the Cost of Goods Manufactured for the month.Only one job remained in process on May 31; this job had been charged with $9,600 of applied overhead cost.The amount of direct materials cost in the unfinished job would be:

• A) $10,600
• B) $16,700
• C) $12,800
• D) $23,400

---

Definitions:

Out-of-pocket Cost

Expenses that are paid out directly and result in a financial outlay.

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted, indicating how much contributes to covering fixed costs and generating profit.

Operating Capacity

The maximum output that a company can produce under normal circumstances over a specific period.

Sunk Costs

Costs that have already been incurred and cannot be recovered, which should not influence future business decisions.