A Company Incurs $4,050,000 of Overhead Each Year in Three

question 96

Multiple Choice

A company incurs $4,050,000 of overhead each year in three departments: Ordering and Receiving, Mixing, and Testing. The company prepares 2,000 purchase orders, works 50,000 mixing hours, and performs 1,500 tests per year in producing 200,000 drums of Goo and 600,000 drums of Slime. The following data are available: Production information for Slime is as follows:
Compute the amount of overhead assigned to Slime.

• A) $2,025,000
• B) $2,467,851
• C) $2,760,000
• D) $3,037,500

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Definitions:

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity supplied.

Supply Curve

A graphical representation showing the relationship between the price of a good and the quantity of the good supplied.

Lowest-Cost Seller

A firm or an individual that can produce or supply goods or services at the lowest price compared to competitors, often due to efficiencies, scale, or technology.

Producer Surplus

The difference between the amount a producer receives from the sale of a product and the minimum amount they would be willing to accept for that product; essentially a measure of producer profitability and well-being.