Muscato Corporation Estimates That Its Variable Manufacturing Overhead Is $19

question 146

Multiple Choice

Muscato Corporation estimates that its variable manufacturing overhead is $19.00 per machine-hour and its fixed manufacturing overhead is $1,442,100 per period. If the denominator level of activity is 7,500 machine-hours, the fixed component in the predetermined overhead rate would be:

• A) $192.28 per machine-hour
• B) $211.28 per machine-hour
• C) $19.00 per machine-hour
• D) $1,900.00 per machine-hour

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Definitions:

Direct Labor

The labor costs directly associated with the production of goods, including wages for workers who are physically involved in creating a product.

First-In, First-Out Method

An inventory valuation method where goods purchased or manufactured first are sold or used first.

Conversion Costs

The combined cost of direct labor and manufacturing overhead expenses, which are incurred to convert raw materials into finished products.

Equivalent Units

Equivalent units are a concept used in cost accounting to standardize the measurement of quantities of partially completed goods in process inventories.