Simplex Company Has the Following Estimated Costs for Next Year

question 10

Multiple Choice

Simplex Company has the following estimated costs for next year: $$\begin{array} { | l | l | } \hline \text { Direct materials } & \$ 15,000 \\\hline \text { Direct labour } & 55,000 \\\hline \text { Sales commissions } & 75,000 \\\hline \text { Salary of production supervisor } & 35,000 \\\hline \text { Indirect materials } & 5,000 \\\hline \text { Advertising expense } & 11,000 \\\hline \text { Rent on factory equipment } & 16,000 \\\hline\end{array}$$ Simplex estimates that 10,000 direct labour and 16,000 machine hours will be worked during the year. If overhead is applied on the basis of machine hours, the overhead rate per hour will be:

• A)$8.56.
• B)$3.50.
• C)$7.63.
• D)$6.94.

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Definitions:

Partnership Interest

Ownership share or participation in a partnership that usually entitles the holder to a proportion of the partnership's profits and assets.

Capital Contributions

The funds or assets initially invested in a business or partnership by its owners or partners.

Ratio

A relationship in numbers expressing the frequency with which one value encompasses or is encompassed by another.

Lowest Terms

The simplest form of a fraction when both the numerator and denominator cannot be any smaller while still being whole numbers.