Keene Company Allocates Overhead on the Basis of Direct Labor

question 88

Multiple Choice

Keene Company allocates overhead on the basis of direct labor hours.It allocates overhead costs of $8,000 to two different jobs as follows: Job 1: (10 hours) = $4,000;Job 2: (10 hours) = $4,000
The production process for Job 2 was then automated.Now Job 2 requires only two hours of direct labor but four hours of mechanical processing.As a result,total overhead increased to $12,000.How much overhead cost will be assigned to Job 1 after automation?

• A) $10,000
• B) $6,000
• C) $4,000
• D) $2,000

---

Definitions:

Distorts Reality

A cognitive bias or psychological state where an individual's perception of reality is significantly altered from the actual state of the world.

Complex

In psychology, a related group of emotionally significant ideas that are completely or partly repressed and cause psychic conflict leading to abnormal mental states or behavior.

Oedipus Complex

A concept in psychoanalytic theory referring to a child's unconscious sexual desire for the opposite-sex parent and jealousy toward the same-sex parent.

Genital Stage

A phase in Freud's psychosexual development theory occurring in puberty, where sexual interests mature and focus on genital organs.