The Forbes Corporation Uses a Standard Cost System in Which

question 40

Multiple Choice

The Forbes Corporation uses a standard cost system in which overhead costs are applied to products on the basis of standard direct labor-hours (DLHs) .The following data applied to the company's activities for June: The fixed component of the predetermined overhead rate for June is:

• A)$3.00 per DLH
• B)$3.23 per DLH
• C)$3.78 per DLH
• D)$3.46 per DLH

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Definitions:

Business Inventory

Items that are held for sale in the ordinary course of business, representing a current asset on a company's balance sheet.

Section 1231 Property

Business property that combines features of capital assets and depreciable property, potentially offering favorable tax treatment on gains.

Trade or Business

An activity carried out for the purpose of earning income or profit, involving regular and continuous operations in a particular field.

Depreciation

An accounting method to allocate the cost of a tangible asset over its useful life, reflecting wear and tear, decay, or obsolescence.