Fenderson Incorporated Makes a Single Product--A Cooling Coil Used in Commercial

question 155

Essay

Fenderson Incorporated makes a single product--a cooling coil used in commercial refrigerators. The company has a standard cost system in which it applies overhead to this product based on the standard machine-hours allowed for the actual output of the period. Data concerning the most recent year appear below:
The company incurred a total of $370,077 in manufacturing overhead cost during the year.
Required:
a. Compute the variable component of the company's predetermined overhead rate.
b. Compute the fixed component of the company's predetermined overhead rate.
c. Compute the company's predetermined overhead rate.
d. Determine whether overhead was underapplied or overapplied for the year and by how much.

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Definitions:

Preferences

The subjective tastes and desires of consumers that influence their choices among various goods and services.

Apples

In economic and financial contexts, this term is often used metaphorically to represent the comparison of similar items or investments, as in "comparing apples to apples."

Oranges

A citrus fruit characterized by a round shape and a sweet, juicy pulp, commonly consumed fresh or used in beverages.

Indifference Curve

A graph that shows a combination of two goods that give a consumer equal satisfaction and utility, thereby indicating the consumer's preferences.