The Goods in Process Inventory Account of a Manufacturing Company

Multiple Choice

The Goods in Process Inventory account of a manufacturing company that uses an overhead rate based on direct labor cost has a $4,400 debit balance after all posting is completed. The cost sheet of the one job still in process shows direct material cost of $2,000 and direct labor cost of $800. Therefore, the company's overhead application rate is:

A) 40%.
B) 50%.
C) 80%.
D) 200%.
E) 220%.