Orr Corporation's Manufacturing Costs for August When Production Was 750

question 158

Multiple Choice

Orr Corporation's manufacturing costs for August when production was 750 units appears below: $\begin{array}{lr}\text { Direct material } & \$ 7 \text { per unit } \\\text { Direct labour } & \$ 6,000 \\\text { Variable overhead } & 3,000 \\\text { Factory Depreciation } & 2,000 \\\text { Factory supervisory salaries } & 7,000 \\\text { Other fixed factory costs } & 1,500\end{array}$ How much is the budgeted manufacturing cost for a month when 500 units are produced?

• A)$13,000
• B)$16,500
• C)$20,000
• D)$9,000

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Definitions:

Incremental Cash Flows

The additional cash flow a company receives from taking on a new project, crucial for analyzing the profitability of the project.

Capital Budgeting

Capital budgeting involves the process of deciding whether to undertake significant financial investments or expenditures, such as purchasing new equipment or investing in new projects.

Competitive Products

Goods or services offered by different firms that compete in the same market space and aim to satisfy the same consumer needs.

Net Operating Cash Flow

The amount of cash generated by a company’s normal business operations, after accounting for operating expenses and working capital changes.