If Expected Factory Overhead Costs Are $400 000 and Expected

question 10

Multiple Choice

If expected factory overhead costs are $400 000 and expected direct labour hours are 40 000,what is the overhead application rate per direct labour hour?

• A)$10
• B)$100
• C)$1 000
• D)$16

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Definitions:

Cash Sales

Transactions where payment for goods or services is made at the time of sale in cash or equivalent forms.

Credit Sales

Sales made by a business where payment is delayed, allowing the customer to purchase goods or services on account.

Accrual Basis

The Accrual Basis of accounting records revenues and expenses when they are earned or incurred, regardless of when cash is exchanged.

Rent Expense

The cost incurred from leasing a space, property, or equipment for business operations or personal use over a specified time period.