The Work in Process Inventory Account of a Manufacturing Firm

question 36

Multiple Choice

The Work in Process inventory account of a manufacturing firm shows a balance of $3,000 at the end of an accounting period. The job cost sheets of two uncompleted jobs show charges of $500 and $300 for materials, and charges of $400 and $600 for direct labor. From this information, it appears that the company is using a predetermined overhead rate, as a percentage of direct labor costs, of:

• A) 83%.
• B) 120%.
• C) 40%.
• D) 300%.

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Definitions:

Process Consultation

A form of consulting where the consultant focuses on the processes of an organization, including communication and decision-making, to improve its effectiveness.

Chilling Effect

A situation where the threat of legal action or other potential repercussions suppresses lawful speech or actions.

Binding Arbitration

A type of arbitration where the decision made by the arbitrator is legally enforceable and cannot be appealed.

Decision-acceptance Effect

The impact that the acceptance of a decision has on individuals or groups, influencing their behaviors and perceptions.