On April 15 of the Current Year, a Fire Destroyed

question 60

Multiple Choice

On April 15 of the current year, a fire destroyed the entire uninsured inventory of a retail store.The following data are available: $\begin{array}{lr}\text { Sales, January } 1 \text { through April } 15 & \$ 300,000 \\\text { Inventory, January } 1 & 50,000 \\\text { Purchases, January } 1 \text { through April } 15 & 250,000 \\\text { Markup on cost } & 25 \%\end{array}$ The amount of the inventory loss is estimated to be

• A)$60,000.
• B)$30,000.
• C)$75,000.
• D)$50,000.

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Definitions:

Machine-hours

A measure of the amount of time a machine is operated, used in calculating manufacturing costs and allocating expenses based on machine usage.

Overapplied Overhead

A situation where the allocated or applied manufacturing overhead cost is more than the actual manufacturing overhead cost incurred.

Underapplied Manufacturing Overhead

A situation where the actual manufacturing overhead costs exceed the overhead allocated to products.

Overapplied Manufacturing Overhead

A situation where the allocated manufacturing overhead costs exceed the actual overhead costs incurred by a company.