Jacson Corporation was undecided whether to use labor hours or labor cost in establishing the annual overhead rate. Labor costs are prone to fluctuate based on new hires, raises, retirements, and resignations. They decided to compute both rates for comparison. The overhead costs for the year were estimated at $525,000 with expected direct labor hours of 35,000 and indirect labor hours of 15,000. Direct and indirect labor costs are estimated to be $420,000 and $210,000 respectively. The overhead application rate for both bases (labor hours, labor cost) would be:

Multiple Choice

• $12 per hour; 80% of labor cost.

• $10.50 per hour; 83.3% of labor cost.

• $15 per hour; 125% of labor cost.

• $12.60 per hour; 120% of labor cost.

Ajax Companys manufacturing overhead cost per unit is 135% of the direct labor cost per unit. If Ajax Companys total direct labor cost for the 6,120 units manufactured totaled $73,440, what is the manufacturing overhead cost per unit?

Multiple Choice

• $4.20.

• $8.89.

• $12.00.

• $16.20.

The following information appears on the income statement of the Davis Company at the end of the year.

Sales	$ 203,000
Cost of goods manufactured	136,000
Gross profit on sales	72,000
Beginning finished goods inventory	55,000

Ending finished goods inventory is:

Multiple Choice

• $50,000.

• $60,000.

• $67,000.

• $139,000.

Lampshade Manufacturing Company sold equipment that cost $70,000 for $22,000. A gain on sale of $4,000 was recorded. How is the Cash Flows from Investing Activities affected?

Multiple Choice

• A cash inflow of $4,000 is recorded.

• A cash inflow of $18,000 is recorded.

• A cash inflow of $22,000 is recorded.

• A cash inflow of $26,000 is recorded.

If the manufacturing overhead was overapplied, then the:

Multiple Choice

• manufacturing overhead account had lower total debits than manufacturing overhead applied had in total credits.

• manufacturing overhead account had more in total debits than manufacturing overhead had in total credits.

• actual overhead expenses were more than the amount booked to Work in Process.

• debits to Work in Process were more than the credits to Work in Process.

Operating expenses that cannot be easily assigned to particular departments at the time transactions occur and are recorded are ________ expenses.

Multiple Choice

• fixed

• variable

• direct

• indirect