Using the Following Accounts and an Overhead Rate of 80

question 104

Multiple Choice

Using the following accounts and an overhead rate of 80% of direct labor cost, determine the amount of applied overhead.

• A)$135,000
• B)$75,000
• C)$60,000
• D)$101,000
• E)$17,000

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Definitions:

Allowance Method

An accounting technique used to account for bad debts by estimating and recording uncollectible accounts receivable.

Outstanding Receivables

The total amount of money owed to a company by its customers for goods or services delivered but not yet paid for.

Allowance for Doubtful Accounts

A reserve for accounts receivable that may not be collectable, reducing the book value of accounts receivable to a more realistic value.

Cash Loan

A financial agreement where a borrower receives a specific amount of cash from a lender and commits to repaying it over time, along with interest.