An Analysis of the Machinery Accounts of Noller Company for 2015

question 99

Multiple Choice

An analysis of the machinery accounts of Noller Company for 2015 is as follows: The information concerning Noller's machinery accounts should be shown in Noller's statement of cash flows (indirect method) for the year ended December 31, 2015, as a(n)

• A) subtraction from net income of $100,000 and a $200,000 decrease in cash flows from financing activities.
• B) addition to net income of $100,000 and a $200,000 decrease in cash flows from investing activities.
• C) $100,000 increase in cash flows from financing activities.
• D) $200,000 decrease in cash flows from investing activities.

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Definitions:

Manufacturing Overhead

All indirect costs associated with manufacturing, excluding direct materials and direct labor costs.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to individual units of production, based on estimated costs and activity levels.

Machine-Hours

A measure of the amount of time machines are used in the production process, often related to allocating manufacturing overhead costs.

Manufacturing Overhead

All the costs related to manufacturing that are not direct materials or direct labor expenses.