Before the Application of Overhead Costs James & Fraser Ltd $$\begin{array} { c c c } & \text { Direct materials } & \text { Direct labour } \\\text { Charged to production } & \$ 60000 & \$ 80000\end{array}$$

question 55

Multiple Choice

Before the application of overhead costs James & Fraser Ltd has the following costs traced to production:
$$\begin{array} { c c c } & \text { Direct materials } & \text { Direct labour } \\\text { Charged to production } & \$ 60000 & \$ 80000\end{array}$$ Assuming that overhead is applied at the rate of 60% of direct labour cost what is the amount of inventory finished for the period? Assume no work in process.

• A) $80 000
• B) $140 000
• C) $176 000
• D) $188 000

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Definitions:

Payback

The period of time required to recover the cost of an investment.

NPV

Net Present Value: a capital budgeting technique that determines the profitability of a project or investment.

WACC

A firm's Weighted Average Cost of Capital is derived by calculating the cost of capital for each capital category and then weighting these costs according to each category's presence in the total capital structure.

NPV

Net Present Value (NPV) is a financial metric that calculates the difference between the present value of cash inflows and the present value of cash outflows over a period of time.