The Homer Corporation Produces Two Products, and Reports the Following

question 41

Multiple Choice

The Homer Corporation produces two products, and reports the following production and cost information for the most recent accounting period.

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Using activity-based costing for assigning overhead costs, the activity rate for quality inspections is:

• A) $60 per inspection
• B) $80 per inspection
• C) $120 per inspection
• D) $240 per inspection
• E) $100 per inspection

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Definitions:

Work in Process Inventory

Work in process inventory includes goods partially completed in the production process, sitting between raw materials and finished goods.

Predetermined Overhead Rate

An estimated overhead rate used to allocate manufacturing overhead costs to products.

Direct Labor Cost

The total cost of wages, benefits, and other compensation for workers directly involved in the production of goods or services.

Applied Overhead

The estimated amount of overhead costs assigned to individual units of production, based on a predetermined allocation rate.