Question

Widely used allocation bases in manufacturing companies, include all of the following, except:

Multiple Choice

• direct labor hours

• machine hours

• product revenue

• direct labor costs

Assume that a company provided the following T-account.

Part 2.

Work in Process
Beg. Bal.	18,000
	480,000
	600,000
	666,250	1,680,000
End. Bal.	84,250

Based on the transactions recorded in this account, which of the following must be true?

Multiple Choice

• The manufacturing overhead applied to production must equal $1,680,000.

• The manufacturing overhead applied to production must equal $84,250.

• The cost of goods manufactured transferred to finished goods must be $1,680,000.

• The cost of goods sold must be $1,680,000.

Answer 1

Question 1

Correct answer-------------product revenue.

.

Labor cost, labor hours, machine hours are all used to allocate overhead.

Question 2

Correct answer-------------The cost of goods manufactured transferred to finished goods must be $1,680,000.

.

In WIP account the right side indicate cost of goods completed and transferred out. The left side indicate costs added and beginning balance in WIP account. Overhead applied are $666,250.