A Company Incurs $4,050,000 of Overhead Each Year in Three

question 4

Multiple Choice

A company incurs $4,050,000 of overhead each year in three departments: Ordering and Receiving, Mixing, and Testing. The company prepares 2,000 purchase orders, works 50,000 mixing hours, and performs 1,500 tests per year in producing 200,000 drums of Goo and 600,000 drums of Slime. The following data are available: $\begin{array}{crr}\text { Department}&\text {Expected use of Driver }&\text {Cost }\\\text { Ordering and Receiving } & 2,000 & \$ 1,200,000 \\\text { Mixing } & 50,000 & 1,500,000 \\\text { Testing } & 1,500 & 1,350,000\end{array}$

$\text { Production information for Slime is as follows: }$
$\begin{array}{cr}\text { Department }&\text { Expected use of Driver }\\\text { Ordering and Receiving } & 1,600 \\\text { Mixing } & 30,000 \\\text { Testing } & 1,000\end{array}$ Compute the amount of overhead assigned to Slime.

• A)$2,025,000
• B)$2,467,851
• C)$2,760,000
• D)$3,037,500

Understand the concept of a production function and its relevance to the efficiency of different forms of production.

Identify and describe the characteristics of short-run and long-run production periods.

Analyze the implications of fixed and variable inputs on production functions.

Explain the law of diminishing returns and its impact on production.

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Definitions:

Contaminated

Refers to objects or areas that have been infected with pathogens or polluted with hazardous substances.

Wound Treatment

Medical management and care strategies applied to injuries involving breaks in the skin or underlying tissues to promote healing and prevent infection.

Granulation

The formation of new, fibrous tissue during the healing process of a wound, which is indicative of healing.

Hemostasis

The physiological process to stop bleeding or hemorrhage, involving blood vessel constriction, platelet plug formation, and blood clotting.