For Wilton Company the predetermined overhead rate is 70% of direct labor cost. During the month $720000 of factory labor costs are incurred of which $200000 is indirect labor. Actual overhead incurred was $360000. The amount of overhead debited to Work in Process Inventory should be:
A) $364000
B) $360000
C) $504000
D) $520000

Question

Quizplus · Accepted Answer

The predetermined overhead rate is 70% of direct labor cost. So, the overhead applied to Work in Process Inventory is 70% of $520,000 ($720,000 - $200,000), which is $364,000.

For Wilton Company the Predetermined Overhead Rate Is 70% of Direct