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:

Opportunity Cost

Opportunity cost is the loss of potential gain from other alternatives when one alternative is chosen.

Consumer Surplus

The separation between the total amount consumers are equipped and willing to pay for a good or service and what is effectively paid.

Total Surplus

The sum of consumer and producer surplus, reflecting the total benefit to society from the production and consumption of goods and services.

Consumer Surplus

The split between the maximum total consumers are prepared to pay for a product or service and the actual payment.