The Bristol Company Uses a Job-Order Cost System In the Previous Question Overhead Is Charged to Production at Data

question 11

Multiple Choice

The Bristol Company uses a job-order cost system. The following data were recorded for June: $\begin{array}{lrr}& \text {June 1 } && \text {Added During June } \\ &\text {Work in Process } & \text { Direct} & \text {Direct}\\\\\end{array}$
$\begin{array}{lrr}\text { Job Number} &\text { Stock }& \text { Materials }&\text { Labour }\\235 & £ 2,500 & £ 600 &£ 400 \\236 &£ 1,500 & £ 800 & £ 1,000 \\237 & £ 1,000 & £ 1,200 & £ 1,750 \\238 & £ 800 & £ 1,500 &£ 2,250 \end{array}$


In the previous question overhead is charged to production at 80% of direct materials cost. Jobs 235, 237, and 238 were completed during June and transferred to finished goods. Jobs 235 and 238 have been delivered to customers.
Assume that the company wants to recalculate the overhead rate and now wants to charge overhead to production at 75% of direct material cost. Bristol's Work in Process Stock balance on June 30 would change to:

• A)£4,100.
• B)£3,900.
• C)£3,300.
• D)£9,450.

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Definitions:

Toy Trains

Toy trains are scale models of trains intended for play or collecting, often part of a larger hobby involving detailed landscapes and elaborate track layouts.

Opportunity Cost

The value of the next best alternative forgone as a result of making a decision, reflecting the trade-offs of choosing one option over another.

Comparative Advantage

The ability of an individual, company, or country to produce a good or service at a lower opportunity cost than competitors, underpinning international trade.

Specialization

The practice of focusing on and becoming expert in a particular subject or skill, in economics, it refers to individuals or firms concentrating on the production of limited kinds of goods or services.