Kinetic Company Estimates That Overhead Costs for the Next Year

question 103

True/False

Kinetic Company estimates that overhead costs for the next year will be $1,600,000 for indirect labor and $400,000 for factory utilities.The company uses direct labor hours as its overhead allocation base,and plans to use 50,000 direct labor hours for this next year.If a product uses 5 direct labor hours,then it will be assigned $200 in overhead costs.

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Definitions:

Line Item

A specific and distinct item that appears on a statement or list, such as a financial report, indicating a single transaction or account component.

Financial Position

A snapshot of the assets, liabilities, and equity of a company at a particular point in time, providing insight into its financial health.

Associates Profit

The share of earnings derived from an associate company in which the parent company has significant influence but not total control.

Comprehensive Income

Represents the total change in equity for a period that is derived from both operating and non-operating activities, excluding any owner changes.