Addison Company Manufactures Two Products, Regular and Supreme - Overhead Applied to Supreme Using Activity-Based Costing Is
A)$1,075,000

question 27

Multiple Choice

Addison Company manufactures two products, Regular and Supreme.Addison's overhead costs consist of machining, $2,500,000; and assembling, $1,250,000.Information on the two products is: $$\begin{array} { l c c } & \text { Regular } & \text { Supreme } \\\text { Direct labor hours } & 10,000 & 15,000 \\\text { Machine hours } & 10,000 & 30,000 \\\text { Number of parts } & 90,000 & 160,000\end{array}$$
- Overhead applied to Supreme using activity-based costing is

• A)$1,075,000.
• B)$1,500,000.
• C)$2,250,000.
• D)$2,675,000.

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Definitions:

Sustainable Growth Rate

The maximum rate at which a company can grow its revenues and profits without needing to increase financial leverage.

Debt-Equity Ratio

An indicator of a firm's use of financial debt, found by dividing the total amount of liabilities by the equity owned by stockholders.

Retention Ratio

The proportion of net income that is retained in the company rather than paid out to shareholders as dividends.

Growth Rate

A measure of the increase in size, number, value, or strength of a business or other entity's key metric over a specified period of time.