Solve the Problem Using the Rule of 78s

question 36

Multiple Choice

Solve the problem using the rule of 78s.
-A fisherman buys a new boat for $45,000. He makes a down payment of $17,000 and finances the Balance at 8% APR over 60 months. Before making the 45th payment, the fisherman decides to pay The remaining balance on the loan. How much interest will the fisherman save?

• A) $359.78
• B) $639.15
• C) $397.69
• D) $369.85

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Definitions:

Product's Individual Differences

Variations or unique features that distinguish each product from others, even if they are from the same production line or category.

Budgeted Factory Overhead

The estimated costs associated with running a factory that are not directly tied to producing goods, such as utilities and maintenance.

Direct Labor Hours

The total number of hours worked by employees directly involved in the production process of goods or services.

Single Plantwide Overhead Rate

A costing method where a single overhead rate is used to allocate all manufacturing overhead costs to products, regardless of the department in which the costs were incurred.