Jurica Corporation Has Two Production Departments, Forming and Customizing

question 286

Multiple Choice

Jurica Corporation has two production departments, Forming and Customizing. The company uses a job-order costing system and computes a predetermined overhead rate in each production department. The Forming 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 predetermined overhead rate for the Forming Department is closest to:

• A) $23.12 per machine-hour
• B) $2.00 per machine-hour
• C) $5.30 per machine-hour
• D) $7.30 per machine-hour

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Definitions:

Stockholders' Equity

The portion of a company's assets that belongs to the shareholders after debts and liabilities have been settled.

Common Stock

Shares representing ownership in a company, entitling holders to vote at shareholder meetings and receive dividends.

Net Income

The conclusive earnings a company retains after all operational costs and taxes are taken away from the revenues.

Statement of Cash Flows

A financial document that provides a summary of the cash inflows and outflows for a company over a specific period of time, showing how it raises and spends money.