In a job-order system,accountants apply factory overhead costs to Work-In-Process Inventory by using the ________.The company does not use activity-based costing.
A) actual overhead costs
B) budgeted indirect costs for value chain functions
C) budgeted overhead rate
D) actual overhead rate

Question

Quizplus · Accepted Answer

In a job-order system, the budgeted overhead rate is used to apply factory overhead costs to Work-In-Process Inventory. This rate is calculated by dividing the budgeted indirect costs for value chain functions by the estimated cost driver base (such as direct labor hours or machine hours). The actual overhead costs may be used for more accurate accounting at the end of the period, but the budgeted overhead rate is used for interim cost accounting purposes. The company's decision not to use activity-based costing does not affect the use of the budgeted overhead rate in the job-order system.

In a Job-Order System,accountants Apply Factory Overhead Costs to Work-In-Process