In Year 1, Braid Corporation, a Calendar-Year Cash-Basis Corporation, Bought

question 85

Essay

In year 1, Braid Corporation, a calendar-year cash-basis corporation, bought office supplies for the next six months in October for $4,500, paid $6,000 for a three-year insurance policy beginning November 1, and borrowed $200,000 on a five-year 6 percent note receiving proceeds of $198,000 on December 1. What is Braid Corporation's total expense deduction in year 1 for these transactions?

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Definitions:

Manufacturing Overhead

All indirect costs related to the manufacturing process, including materials, labor, and expenses not directly tied to the production of goods.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead to products based on a certain activity, like labor hours or machine hours.

Direct Labor-hours

The sum of working hours of employees directly engaged in producing goods.

Manufacturing Overhead

All indirect costs associated with the production process, such as utilities, maintenance, and management salaries, not directly tied to direct materials or direct labor.