O'Hare Company, is a manufacturing firm that uses a job-order cost system to determine the costs of its products. During the current accounting period, O'Hare applied estimated manufacturing overhead costs of $1,550 to job #132. Which of the following statements regarding this transaction is correct?

Question

Quizplus · Accepted Answer

When O'Hare applies estimated manufacturing overhead costs to a job, manufacturing overhead increases, not decreases. This is because manufacturing overhead is an indirect cost and cannot be directly traced to a specific job, so it is allocated using estimates or predetermined rates. The other options are incorrect because there is no mention of any changes to work in process inventory, net income, or total equity specifically related to job #132.

O'Hare Company, Is a Manufacturing Firm That Uses a Job-Order