For Jacobs Company, the predetermined overhead rate is 70% of direct labor cost.During the month, $300,000 of factory labor costs are incurred of which $70,000 is indirect labor.Actual overhead incurred was $160,000.The amount of overhead debited to Work in Process Inventory should be:
A)$161,000
B)$160,000
C)$210,000
D)$230,000

Question

Quizplus · Accepted Answer

The predetermined overhead rate is 70% of direct labor cost. Direct labor cost is $300,000 - $70,000 = $230,000. Overhead applied is $230,000 * 70% = $161,000.

For Jacobs Company, the Predetermined Overhead Rate Is 70% of Direct