With Department a Sales of $200,000, Department B Sales of $600,000

question 48

Multiple Choice

With Department A sales of $200,000, Department B sales of $600,000, and overhead expense to be allocated of $25,000, the distribution of overhead to Department A based on sales is:

• A)$18,750
• B)$25,000
• C)$2,600
• D)$6,250
• E)None of these

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Definitions:

Consolidated Net Income

The total amount of net income earned by a parent company and its subsidiaries, presented as a single figure after eliminating inter-company transactions.

Bonds Payable

Long-term debts issued by corporations or governmental units, represented by formal certificates obligating the issuer to pay interest and repay principal at a specified maturity date.

Interest Expense

The cost incurred by an entity for borrowed funds, including loans, bonds, or lines of credit, typically shown as an expense on the income statement.

Additional Paid-In Capital

Additional Paid-In Capital refers to the amount of money paid by investors for shares of stock above the par value of the shares, representing excess received from shareholders over the basic stock value.