Happy Clicks, Inc What Is the Amount of Manufacturing Overhead Cost Allocated to $5.00

question 78

Multiple Choice

Happy Clicks, Inc. uses a predetermined overhead allocation rate of $5.00 per machine hour. Actual overhead costs incurred during the year are as follows: $$\begin{array} { | l | r | } \hline \text { Indirect materials } & \$ 6600 \\\hline \text { Indirect labor } & \$ 3200 \\\hline \text { Plant depreciation } & \$ 43 \\\hline \text { Plant utilities and insurance } & \$ 9900 \\\hline \text { Other plant overhead costs } & \$ 11,700 \\\hline \text { Total machine hours used during year } & 7000 \text { hours } \\\hline\end{array}$$ What is the amount of manufacturing overhead cost allocated to Work-in-Process Inventory during the year?

• A) $38,443
• B) $9800
• C) $28,643
• D) $35,000

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Definitions:

Product Liability

The legal liability of manufacturers, wholesalers, or retailers to consumers, users, and bystanders for damages or injuries suffered because of defects in goods sold.

Noneconomic Damages

Compensation awarded in a lawsuit for losses that do not have a direct monetary value, such as pain and suffering, loss of companionship, or emotional distress.

Negligence

The failure to take reasonable care to avoid causing injury or loss to another person, resulting in legal liability.

Disclaimer

A term in a contract whereby a party attempts to relieve itself of some potential liability associated with the contract. The most common example is the seller’s attempt to disclaim liability for defects in goods that it sells.