A Company Operated at 82% of Its Capacity for the Past

question 109

Multiple Choice

A company operated at 82% of its capacity for the past year.Fixed costs during this time were $152,000, variable costs were 60% of sales, and sales were $790,000.Calculate the company's operating profit.

• A) $97,000
• B) $185,000
• C) $56,000
• D) $164,000

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Definitions:

Fixed Manufacturing Overhead

Represents the set of costs that are required to operate a manufacturing facility, which do not vary with the volume of production.

Job-Order Costing System

A cost accounting system that assigns costs to specific production batches or jobs.

Predetermined Overhead Rate

A rate used to allocate overhead costs to products or services, based on a predetermined activity level.

Manufacturing Departments

Sections in a manufacturing plant, each focusing on various parts of the manufacturing process.