The Work in Process Inventory Account of a Manufacturing Company

question 142

Multiple Choice

The Work in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $4,400 debit balance after all posting is completed. The cost sheet of the one job still in process shows direct material cost of $2,000 and direct labor cost of $800. Therefore, the company's overhead application rate is:

• A) 50% of direct labor cost.
• B) 80% of direct labor cost.
• C) 300% of direct labor cost.
• D) 40% of direct labor cost.
• E) 200% of direct labor cost.

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Definitions:

Duties

Responsibilities or tasks one is required to perform as part of a job or role.

Decision-making Authority

The power or right conferred upon individuals or groups to make important decisions within an organization.

Organizational Structure

The arrangement of roles, responsibilities, and relationships within an organization, defining how activities are directed to achieve goals.

Customer Groups

Segments of customers categorized based on shared characteristics, preferences, or behaviors, for targeted marketing or service strategies.