The Following Information Pertains to Longboat Company Longboat Company Does Not Divide Costs into Fixed and Variable

question 62

Multiple Choice

The following information pertains to Longboat Company: $$\begin{array} { | l | c | c | c | c | } \hline & { \text { Support Departments } } & &{ \text { Producing Departments } } \\\hline & \text { Personnel } & \text { Maintenance } & \text { Fabrication } & \text { Assembly } \\\hline \text { Budgeted overhead } & \$ 40,000 & \$ 72,000 & \$ 140,000 & \$ 160,000 \\\hline \text { Direct 1abor hours } & 2,000 & 2,500 & 8,000 & 10,000 \\\hline \text { Machine hours } & - & - & 12,000 & 8,000 \\\hline \text { Number of employees } & 4 & 5 & 15 & 25 \\\hline\end{array}$$ Longboat Company does not divide costs into fixed and variable components. Personnel costs are allocated based on the number of employees, and maintenance costs are allocated based on machine hours. Predetermined overhead rates for fabrication and assembly are based on direct labor hours. (Round amounts to dollars.)
If the direct method is used to allocate support department costs, the predetermined overhead rate for the Fabrication Department (rounded to two decimal places) would be

• A)$28.80.
• B)$24.78.
• C)$7.28.
• D)$5.40.

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Definitions:

Maximize Profits

The goal of operating in a way that achieves the highest possible profit from business activities.

Tit-For-Tat Strategy

A game theory strategy that involves mirroring your opponent’s previous action, often used to foster cooperation or retaliate in competitive settings.

Dominant Strategy

A strategy that yields the best outcome for a player, regardless of what the opponents choose.

Bottled Water

Packaged drinking water sold in plastic or glass bottles, and possibly treated or mineral-enriched for commercial sale.