Axe Applies Overhead to Jobs at a Predetermined Rate of 80

question 41

Multiple Choice

Axe applies overhead to jobs at a predetermined rate of 80% of direct Labour cost. Job No. 9, the only job still in process at the end of March, has been charged with direct Labour of £1,000. The amount of direct materials charged to Job No. 9 was

• A)£12,000.
• B)£ 4,400.
• C)£ 2,600.
• D)£ 1,500.

---

Definitions:

Liability Account

An accounting record that reports the amounts a company owes to creditors and other parties, often categorized as current or long-term.

Owner's Equity Account

Represents the total amount of capital the owner has in a business after liabilities have been subtracted from assets.

Transaction

An agreement or exchange between two parties that involves the sale, purchase, or trade of goods, services, or financial assets.

T-Account

A visual representation of a general ledger account that helps in understanding the effects of transactions on account balances.