Fisher Corporation Uses a Predetermined Overhead Rate Based on Direct

question 215

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

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Definitions:

Accounts Receivable Approach

A method focusing on the management and analysis of accounts receivable to improve a company's liquidity and operational efficiency.

Credit Policy

A credit policy is a set of guidelines that a company follows to determine the credit terms for customers, including payment terms, interest rates, and the criteria for extending credit.

All-Cash Policy

A business strategy in which transactions are conducted exclusively with cash, avoiding the use of credit.

Credit Period

The time frame allowed by a seller to a buyer to pay for goods or services received, usually expressed in days.