Rancor Inc

question 69

Multiple Choice

Rancor Inc. had a per-unit conversion cost of $2.50 during April and incurred direct materials cost of $100,000, direct labor costs of $75,000, and overhead costs of $45,000 during the month. How many units did they manufacture during the month?

• A) 70,000
• B) 18,000
• C) 48,000
• D) 30,000

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Definitions:

Gross Margin

The difference between revenue and cost of goods sold, divided by revenue, expressed as a percentage; it measures how efficiently a company uses its resources to make products.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual units of production, based on a selected activity base such as machine hours or labor hours.

Machine-Hours

A unit of measure that represents the operational time of a machine, often used to allocate manufacturing overhead costs to products.

Unused Capacity

The available production or service facility that is not being used or is underutilized.