The Work in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $4,400 debit balance after all posting is completed.The cost sheet of the one job still in process shows direct material cost of $2,000 and direct labor cost of $800.Therefore,the company's overhead application rate is:
A)40%.
B)50%.
C)80%.
D)200%.
E)220%.

Question

Quizplus · Accepted Answer

Overhead application rate = (Overhead cost / Direct labor cost) * 100= ($4,400 / $800) * 100= 550%= 220% (rounded to the nearest whole number)

The Work in Process Inventory Account of a Manufacturing Company