The Tse Manufacturing Company Uses a Job-Order Costing System and Applies

Multiple Choice

The Tse Manufacturing Company uses a job-order costing system and applies overhead to jobs using a predetermined overhead rate. The company closes out any balance in the Manufacturing Overhead account to Cost of Goods Sold. During the year the company's Finished Goods inventory account was debited for $125,000 and credited for $110,000. The ending balance in the Finished Goods inventory account was $28,000. At the end of the year, manufacturing overhead was overapplied by $4,500.
-Which of the following cost elements is generally absent in professional service organizations such as public accounting firms?

A) Direct labour.
B) Overhead.
C) Raw material.
D) Indirect labour.