In Determining the Cost of Inventory,Department A's Indirect Costs Are

question 43

Multiple Choice

In determining the cost of inventory,Department A's indirect costs are to be allocated using machine hours as the cost driver.If Department A's indirect costs total $300 000 and it expects to use 25 500 machine hours for the period the indirect cost rate for the department is:

• A)$11.765 per machine hour
• B)$0.085 per machine hour
• C)there is insufficient information to determine the indirect cost rate for the department
• D)none of the options is correct

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Definitions:

Work in Process Inventory

The value of goods in various stages of production but not yet completed; includes materials, labor, and overhead costs incurred so far.

Process Costing

An accounting methodology used for homogeneous products, allocating manufacturing costs to units of output on an average basis.

Process Costing

A costing method used in manufacturing where costs are assigned to batches or production runs, typically suitable for homogeneous products.

Department

A distinct area or division within a company or organization designated for specific tasks or functions.