Garza Corporation Has Two Production Departments, Casting and Customizing

question 252

Multiple Choice

Garza Corporation has two production departments, Casting and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Casting Department's predetermined overhead rate is based on machine-hours and the Customizing Department's predetermined overhead rate is based on direct labor-hours. At the beginning of the current year, the company had made the following estimates: The estimated total manufacturing overhead for the Customizing Department is closest to:

• A) $54,110
• B) $30,100
• C) $98,700
• D) $68,600

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Definitions:

Expected Value

A calculation in statistics that quantifies the average outcome of a random event over a large number of occurrences.

Mean

The average value of a set of numbers, calculated by dividing the sum of all values by the number of values.

Risk Aversion

A preference for safer investments, avoiding risk even at the expense of lower potential returns.

Risky Securities

Financial instruments that carry a high level of risk, offering the potential for higher returns in exchange for greater likelihood of loss.