The Thomlin Company Forecasts That Total Overhead for the Current

question 74

Multiple Choice

The Thomlin Company forecasts that total overhead for the current year will be $15,000,000 with 300,000 total machine hours.Year to date,the actual overhead is $16,000,000 and the actual machine hours are 330,000 hours.If the Thomlin Company uses a predetermined overhead rate based on machine hours for applying overhead,as of this point in time (year to date) ,the overhead is

• A) $1,000,000 overapplied
• B) $1,000,000 underapplied
• C) $500,000 overapplied
• D) $500,000 underapplied

Determine the minimum acceptable price for special orders and product pricing.

Evaluate make or buy decisions using relevant costing.

Assess the financial implications of discontinuing a product or department.

Apply the concept of contribution margin in decision-making.

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Definitions:

Voting Right

The entitlement of the shareholders of a company to vote on corporate policy, including decisions regarding the corporate board.

Treasury Stock

Shares that were issued and subsequently reacquired by the company, reducing the amount of outstanding stock on the open market.

Authorized Stock

Authorized stock refers to the maximum number of shares that a corporation is legally authorized to issue according to its corporate charter.

Market Value

The present cost at which an asset or service is available for purchase or sale in a market.