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Denver Company Uses a Job Costing System

question 121

Multiple Choice

Denver Company uses a job costing system. The work in process inventory on December 31 consisted of Job No. 173 with a balance of $66,900. Job No. 173 has been charged with manufacturing overhead costs of $20,500. Denver allocates manufacturing overhead costs at a rate of 50% of direct labor cost. What was the amount of direct materials charged to Job No. 173?


Definitions:

Self-Control Problems

Refers to the difficulty people have in sticking with earlier plans and avoiding suboptimal decisions when finally confronted with a particular decision-making situation. A manifestation of time inconsistency and potentially avoidable by using precommitments.

Time Inconsistency

The human tendency to systematically misjudge at the present time what will actually end up being desired at a future time.

Behavioral Economists

Economists who study the psychological, cognitive, emotional, cultural, and social factors on the economic decisions of individuals and institutions.

Precommitments

Actions taken ahead of time that make it difficult for the future self to avoid doing what the present self desires. See time inconsistency and self-control problems.

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