Bell Manufacturers Inc.has estimated total factory overhead costs of $60,000 and 10,000 direct labor hours for the current fiscal year.If job number 117 incurred 2,000 direct labor hours,the work in process account will be increased and factory overhead will be
Decreased for

Question

Quizplus · Accepted Answer

The predetermined overhead rate can be calculated by dividing the estimated total factory overhead costs by the estimated direct labor hours: $60,000 / 10,000 hours = $6 per direct labor hour. When job number 117 incurs 2,000 direct labor hours, the applied overhead would be 2,000 hours x $6 per hour = $12,000. This would increase the work in process account and decrease the factory overhead account by $12,000. Therefore, the correct answer is C.