Snead, Inc

question 80

Multiple Choice

Snead, Inc.incurred the following infrequent losses during 2007: A $70,000 write-down of equipment leased to others.
A $40,000 adjustment of accruals on long-term contracts.
A $60,000 write-off of obsolete inventory.
In its 2007 income statement, what amount should Snead report as total infrequent losses that are not considered extraordinary?

• A)$170,000.
• B)$130,000.
• C)$110,000.
• D)$100,000.

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Definitions:

Activity Rate

In cost accounting, this refers to the cost driver rate used in activity-based costing to allocate costs to products or services.

Machine Setups

The preparations and adjustments made to machines before starting a production run, potentially including configuration for different products.

Activity-Based Costing

A costing methodology that assigns expenses to products and services based on the activities that go into producing them.

Manufacturing Overhead

All manufacturing costs that are not direct materials or direct labor, including costs associated with running the factory such as utilities and maintenance.