Yancey Productions is a film studio that uses a job-order
costing system. The company’s direct materials consist of items
such as costumes and props. Its direct labor includes each film’s
actors, directors, and extras. The company’s overhead costs include
items such as utilities, depreciation of equipment, senior
management salaries, and wages of maintenance workers. Yancey
applies its overhead cost to films based on direct
labor-dollars.
At the beginning of the year, Yancey made the following
estimates:
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