Austin Company Uses a Job Order Cost Accounting System

question 7

Multiple Choice

Austin Company uses a job order cost accounting system. The company's executives estimated that direct labor would be $2,000,000 (200,000 hours at $10/hour) and that factory overhead would be $1,500,000 for the current period. At the end of the period, the records show that there had been 180,000 hours of direct labor and $1,200,000 of actual overhead costs. Using direct labor hours as a base, what was the predetermined overhead allocation rate?

• A) $6.00 per direct labor hour.
• B) $7.50 per direct labor hour.
• C) $6.67 per direct labor hour.
• D) $8.33 per direct labor hour.
• E) $7.08 per direct labor hour.

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Definitions:

Foliation

The repetitive layering in metamorphic rocks caused by the reorientation of minerals under directed pressure.

Deposits

Sediments, minerals, or organic matter that have accumulated through geological processes in a particular location.

Granite

Granite is a coarse-grained igneous rock composed mainly of quartz, feldspar, and mica, known for its durability and widespread use in construction and monuments.

Granite

A common type of intrusive, igneous rock with a granular texture, composed mainly of quartz, feldspar, and mica, often used in construction.