Ask Question
13 March, 09:13

Doyle Co. uses a job order cost accounting system. At year-end the Work-in-Process Inventory controlling account showed a debit balance of $43,125. For the two jobs in process at year-end, one showed $6,000 in direct materials and $4,500 in direct labor. The job cost sheet for the second job showed $9,000 in direct materials and $6,750 in direct labor.

If the company is using a predetermined overhead application rate based on direct labor cost, the rate is:

A. 50%.

B. 100%.

C. 150%.

D. 200%.

+2
Answers (1)
  1. 13 March, 11:28
    0
    C. 150%

    Explanation:

    The computation of the predetermined overhead application rate is shown below:

    = (Overhead amount : Total direct labor cost) * 100

    where,

    Overhead amount equals to

    = Debit balance - direct material 1 - direct labor 1 - direct material 2 - direct labor 2

    = $43,125 - $6,000 - $4,500 - $9,000 - $6,750

    = $16,875

    Total direct labor cost equal to

    = $4,500 + $6,750

    = $11,250

    So, the predetermined overhead application rate would be

    = ($16,875 : $11,250) * 100

    = 150%
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Doyle Co. uses a job order cost accounting system. At year-end the Work-in-Process Inventory controlling account showed a debit balance of ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers