A Manufacturing Company Applies Overhead Based on Direct Labor Hours $\begin{array}{llr} \text { Overhead } &720,000\\ \text { Cash } &&720,000\\ \end{array}$

question 179

Multiple Choice

A manufacturing company applies overhead based on direct labor hours.At the beginning of the year,it estimated that overhead costs would be $720,000 and direct labor hours would be 90,000.Actual overhead costs incurred were $754,400,and actual direct labor hours were 92,000.The entry to assign overhead costs during the year would be

• A)
• \(\begin{array}{llr}
• \text { Overhead } &720,000\\
• \text { Cash } &&720,000\\
• \end{array}\)
• B)
• \(\begin{array}{ll}
• \text { WIP Inventory } & 736,000 \\
• \text { Overhead } & & 736,000
• \end{array}\)
• C)
• \[\begin{array} { l }
• \text { Cash } & 754,400 \\
• \text { Overhead }&& 754,400
• \end{array}\]
• D)
• \[\begin{array} { l l }
• \text { Overhead } & 754,400 \\
• \quad \text { WIP Inventory } && 754,400 \\
• \end{array}\]

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Definitions:

Good

A material item or service that satisfies a human want or need.

Price

The fiscal amount deemed necessary, expected, or expended in purchasing something.

Rationing Device

A method or system used to allocate scarce goods, services, or resources among competing demands.

Equilibrium

A state in a market where supply equals demand, and there is no tendency for change in the price or quantity.