Use the Following Information for the Next 5 Questions

question 98

Multiple Choice

Use the following information for the next 5 questions.
The managers at Ithaca Manufacturing are discussing ways to allocate the cost of support departments such as Quality Control and Maintenance to the operating departments. To aid them in this discussion, the controller has provided the following information.
-(CMA) If Ithica Manufacturing decides not to allocate support costs to the operating departments, the overhead allocated to each direct labor hour in the Assembly Department would be

• A) $3.20
• B) $3.50
• C) $12.00
• D) $16.00

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Definitions:

Capital Components

The mix of debt, equity, and other financial instruments used by a company to fund its operations and growth.

Overall Cost Of Capital

The weighted average of the costs of all sources of financing used by a firm, including debt and equity.

Invested Funds

Money placed into vehicles like stocks, bonds, or mutual funds with the expectation of earning a return.

Cost Of Capital

The return rate that a company must earn on an investment to maintain its market value and attract funds.