Happy Clicks Inc What Is the Amount of Manufacturing Overhead Cost Allocated to $4.75

question 21

Multiple Choice

Happy Clicks Inc. uses a predetermined overhead allocation rate of $4.75 per machine hour. Actual overhead costs incurred during the year are as follows: $$\begin{array} { | l | r | } \hline \text { Indirect materials } & \$ 5,200 \\\hline \text { Indirect labor } & \$ 3,750 \\\hline \text { Plant depreciation } & \$ 4,800 \\\hline \text { Plant utilities and insurance } & \$ 9,530 \\\hline \text { Other plant overhead costs } & \$ 12,700 \\\hline \text { Total machine hours used during the year } & 7,520 \text { hours } \\\hline\end{array}$$ What is the amount of manufacturing overhead cost allocated to Work-in-Process Inventory during the year?

• A) $35,980
• B) $8,950
• C) $27,030
• D) $35,720

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Definitions:

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business within a certain range of activity.

Cost of Goods Manufactured

The total production cost of goods completed during a specific period, including materials, labor, and overhead.

Variable Costing

An accounting method that considers only variable costs as product costs and treats fixed costs as period costs.

Direct Costing

An accounting method that identifies variable costs directly associated with production and excludes fixed costs from product costing.