Overhead Is Applied as a Percent of Direct Labor Costs

question 64

Multiple Choice

Overhead is applied as a percent of direct labor costs.Estimated overhead and direct labor costs for the year were $250,000 and $125,000,respectively.During the year,actual overhead was $248,000 and actual direct labor cost was $123,000.The entry to close the over- or underapplied overhead at year-end,assuming an immaterial amount,would include:

• A) A debit to Cost of Goods Sold for $2,000.
• B) A debit to Factory Overhead for $2,000.
• C) A credit to Finished Goods Inventory for $2,000.
• D) A debit to Goods in Process Inventory for $2,000.
• E) A credit to Cost of Goods Sold for $2,000.

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Definitions:

Air Patterns

The general movement and distribution of air, including wind, that affects weather systems and climate.

Tropics

The region of the Earth surrounding the equator, characterized by a warm climate and receiving direct sunlight throughout the year.

Pressure Air Masses

Large volumes of air defined by their pressure and temperature characteristics, playing a critical role in weather patterns and climatic conditions.

Cold Front

The leading edge of a cooler mass of air, replacing (at ground level) a warmer mass of air.