The management of Krach Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The company's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 10,000 machine-hours. Capacity is 12,000 machine-hours and the actual level of activity for the year is assumed to be 9,500 machine-hours. All of the manufacturing overhead is fixed and both the estimated amount at the beginning of the year and the actual amount at the end of the year are assumed to be $12,000 per year. For simplicity, it is assumed that this is the estimated manufacturing overhead for the year as well as the
manufacturing overhead at capacity. It is further assumed that this is also the actual amount of manufacturing overhead for the year. If the company bases its predetermined overhead rate on capacity, what would be the cost of unused capacity reported on the income statement prepared for internal management purposes?
A. $1,900
B. $2,500
C. $600
D. $2,000
Answer: B
You might also like to view...
The present value of a perpetuity that pays $F every year when the annual rate of discount is i is
A. F/(1 + i). B. F×i. C. F/i. D. F + i.
The type of open-ended question where a picture is presented and respondents are asked to make up a story about what they think is happening or may happen in the picture is word association
Indicate whether the statement is true or false
Customers can be classified into four relationship groups based on their profitability and projected loyalty. Which customer type is associated with high profitability and long-term loyalty?
A) barnacles B) strangers C) butterflies D) true friends E) cash cows
During meetings, Anton has a tendency to spend most of his time on his phone. If he were being entirely honest, he’d have to admit that he believes the project this group is working on is not as important as what he has was working on prior to the meeting. He also doesn’t think the other members of the group are all that bright, at least compared to him. Anton appears to be a(n) ______ in terms of the types of problem members in a meeting.
a. social loafer b. arguer c. bored member d. wanderer