Mudd Shoe Company Has Expected Overhead Costs of $864,000

question 55

Multiple Choice

Mudd Shoe Company has expected overhead costs of $864,000.The majority of the overhead costs are incurred providing production support to the direct labor force.Direct labor rates vary from $12 to $21 per hour, and more complex tasks are assigned to more skilled workers who have higher pay rates.Management projects direct labor costs to be $540,000 with 39,273 direct labor hours.More complex tasks require proportionally more support than do the less complex tasks.
Each model/size of shoe is produced in a separate production batch and constitutes a job.Mudd allocates overhead based on direct labor cost.During the year, the company produced 6,600 pairs of the size 8 Beachcomber shoes.A total of 4,200 direct labor hours, costing $54,600, were assigned to the job.How much overhead will be assigned to the size 8 Beachcomber shoes?

• A)$92,400
• B)$90,560
• C)$87,360
• D)$57,750

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Definitions:

Alternative Hypothesis

In hypothesis testing, the hypothesis that contradicts the null hypothesis, usually suggesting that a new theory or intervention has an effect.

P-value

A statistical measure that indicates the probability of the observed data, or more extreme, assuming that the null hypothesis is true.

Null Hypothesis

A statement or hypothesis that assumes no statistical significance exists in a set of given observations, serving as the default assumption to be tested.

P-value

A measure in statistics that helps in assessing the strength of the results from a hypothesis test, indicating the probability of observing the data if the null hypothesis is true.