A Firm's Total Overhead Incurred for the Year Was $40

question 55

Multiple Choice

A firm's total overhead incurred for the year was $40 000, and at year-end the overhead component of WIP, FG and COGS were as follows:
If underapplied or overapplied overhead is to be prorated, what is the amount (to the nearest dollar) that will be transferred to WIP because of the proration?

• A) Credit WIP with $945
• B) Debit WIP with $945
• C) Credit WIP with $974
• D) Debit WIP with $974

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Definitions:

Microsoft Stock

Equity shares of Microsoft Corporation, representing ownership interest and potential financial returns to investors in this multinational technology company.

Interest Rate

The charge for borrowing money or the payment for saving money, typically expressed as a percentage of the principal amount per annum.

Present Value

The immediate worth assigned to a future monetary sum or sequence of cash inflows, utilizing a specific interest rate for calculation.

Net Present Value

A financial metric that evaluates the profitability of an investment or project by calculating the difference between the current value of all cash inflows and outflows over time.