The Goods in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $7,750 debit balance after all posting is completed.The cost sheet of the one job still in process shows direct material cost of $6,000 and direct labor cost of $1,000.Therefore,the company's overhead application rate is:
A) 10.7%
B) 75.0%
C) 133.0%
D) 90.3%
E) 111.0%

Question

Quizplus · Accepted Answer

GIP = DM + DL + OH
$7,750 = $6,000 + $1,000 + OH
OH = $750
OH rate = $750/$1,000 = 75.0%

The Goods in Process Inventory Account of a Manufacturing Company