Clemmens Company Applies Overhead Based on Direct Labor Cost

question 79

Multiple Choice

Clemmens Company applies overhead based on direct labor cost. Estimated overhead and direct labor costs for the year were $112,500 and $125,000, respectively. During the year, actual overhead was $107,400 and actual direct labor cost was $120,000. The entry to close the over- or underapplied overhead at year-end, assuming an immaterial amount, would include:

• A) A credit to Factory Overhead for $600.
• B) A credit to Cost of Goods Sold for $600.
• C) A credit to Finished Goods Inventory for $600.
• D) A debit to Work in Process Inventory for $600.
• E) A debit to Cost of Goods Sold for $600.

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Definitions:

Empirical Quality

A characteristic or property of something based on direct observation or experience rather than theories or logic.

Structural Empowerment

Refers to the ways organizations provide employees with access to information, resources, and opportunities for professional growth and influence within their roles.

Spinal Cord Injury

Damage to any part of the spinal cord or nerves at the end of the spinal canal, often causing permanent changes in strength, sensation, and other body functions below the site of the injury.

Continuing

The process or status of carrying on with an action or task without interruption.