John Has Applied Overhead of $80,000 and Actual Overhead of $70,600

question 92

Multiple Choice

John has applied overhead of $80,000 and actual overhead of $70,600 for the month of November.He applies overhead based on direct labor hours, and that amounts to 10,000 hours for the month of November.The overhead for the year was estimated to be $1,120,000.How many direct labor hours were estimated for the year?

• A) 225,200
• B) 140,000
• C) 500,000
• D) 150,000
• E) 650,700

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Definitions:

Average Collection Period

The typical timeframe a firm needs to gather payments from sales made on credit, showcasing how efficient its credit and collection procedures are.

Total Current Assets

The aggregate amount of all current assets on a company’s balance sheet, which are expected to be converted into cash within one fiscal year.

Receivable Turnover

A measure of how quickly a company collects cash from its accounts receivable, typically calculated as net credit sales divided by average accounts receivable.

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a period, indicating the efficiency in managing and selling goods.