Galbraith Company Applies Overhead Cost to Jobs on the Basis

question 25

Multiple Choice

Galbraith Company applies overhead cost to jobs on the basis of 70% of direct Labour cost. If Job 201 shows £28,000 of manufacturing overhead applied, the direct Labour cost on the job was

• A)£40,000.
• B)£19,600.
• C)£28,000.
• D)£36,400.

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Definitions:

Peak Efficiency

The highest level of performance or effectiveness that a process, machine, or organization can achieve.

ATC (Average Total Cost)

The per unit cost of production, calculated by dividing the total cost by the quantity of output produced.

MC (Marginal Cost)

The additional expense associated with the production of one more unit of a product or service.

Take a Loss

To realize a financial loss on an investment or transaction, often as a result of selling assets for less than their purchase price.