Reeves Co. filed suit against Higgins, Inc., seeking damages for copyright violations. Higgins' legal counsel believes it is probable that Higgins will settle the lawsuit for an estimated amount in the range of $100,000 to $200,000, with all amounts in the range considered equally likely. How should Higgins report this litigation?
A. As a liability for $150,000 with disclosure of the range.
B. As a liability for $200,000 with disclosure of the range.
C. As a liability for $100,000 with disclosure of the range.
D. As a disclosure only. No liability is reported.
Answer: C
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Dehner Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on direct labor-hours. The company based its predetermined overhead rate for the current year on the following data: Total direct labor-hours 40,000Total fixed manufacturing overhead cost$96,000Variable manufacturing overhead per direct labor-hour$3.00 Recently, Job P951 was completed with the following characteristics: Number of units in the job 20Total direct labor-hours 100Direct materials$755Direct labor cost$4,000 The predetermined overhead rate is closest to:
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