• the Overhead Is Allocated to Jobs Using an Estimated

question 104

Multiple Choice

• The overhead is allocated to jobs using an estimated rate applied to direct labour hours. The budget for the year called for $180,000 of overhead cost and 60,000 direct labour hours.
• Accounts payable is used for materials only. The balance on 9/1 was $6,000. September's payments were $40,000.
• September 1 finished goods inventory was $11,000.
• Cost of jobs completed in September was $89,000.
• On September 30 there was a single job unfinished, consisting of $1,800 (300 hours) of direct labour and $2,600 of direct material.
• 5,200 direct hours were worked during September. All workers earn the same rate of pay.
• All actual overhead costs incurred have been recorded.
Over- or underapplied overhead for September was:

• A)$800 underapplied
• B)800 overapplied
• C)$1,600 underapplied
• D)$1,600 overapplied

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Comprehend the structure and utility of a production cost report.