The Amount of Overhead Applied for Activity 2 During the
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question 27

Multiple Choice

$$\begin{array}{l}\begin{array} { | l | l | l | } \hline & \begin{array} { l } \text { Estimated } \\\text { Overhead } \\\text { Cost }\end{array} & \begin{array} { l } \text { Expected } \\\text { Activity }\end{array} \\\hline \text { Activity 1 } & \$ 11,916 & 900 \\\hline \text { Activity 2 } & \$ 12,360 & 1,200 \\\hline \text { Activity 3 } & \$ 19,950 & 1,000 \\\hline\end{array}\\\text { Actual activity for the current year was as follows: }\\\begin{array} { | l | c | } \hline & \begin{array} { l } \text { Actual } \\\text { Activity }\end{array} \\\hline \text { Activity 1 } & 915 \\\hline \text { Activity 2 } & 1,185 \\\hline \text { Activity 3 } & 965 \\\hline\end{array}\end{array}$$ The amount of overhead applied for Activity 2 during the year was closest to:

• A)$12,205.50.
• B)$12,460.00.
• C)$16,905.75.
• D)$12,360.00.

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Definitions:

Maintenance Agreement

A contract in which one party agrees to maintain an asset owned by another party, typically involving regular service checks and repairs.

Guaranteed Purchase Options

Provisions in insurance or financial contracts allowing the holder to acquire additional coverage or securities at predetermined conditions.

Capital Leases

Leasing agreements classified as purchases of assets for accounting purposes, due to their terms transferring substantial ownership rights to the lessee.

Sales-Type Leases

Leases where the lessor recognizes immediate profit on the transaction, similar to a sale, typically in equipment or vehicle leasing.