Adams Manufacturing Allocates Overhead to Production on the Basis of Direct

question 201

Multiple Choice

Adams Manufacturing allocates overhead to production on the basis of direct labor costs. At the beginning of the year, Adams estimated total overhead of $396,000; materials of $410,000 and direct labor of $220,000. During the year Adams incurred $418,000 in materials costs, $413,200 in overhead costs and $224,000 in direct labor costs.
-Compute the amount of overhead applied to jobs during the year.

• A) $403,200.
• B) $413,200.
• C) $424,450.
• D) $413,190.
• E) $396,000.

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Definitions:

Net Cash

The amount of cash available after accounting for cash inflows and outflows.

Net Income

The total revenue minus total expenses, indicating the profit earned by a business during a specific period.

Operating Activities

Activities related to the primary operations of a business, such as sales, supply chain management, and customer service.

Indirect Method

A method used in cash flow statement preparation that adjusts net income for changes in balance sheet accounts to convert it from accrual to cash basis.