Campaign Company, Which Applies Overhead to Production on the Basis

question 75

Multiple Choice

Campaign Company, which applies overhead to production on the basis of machine hours, reported the following data for the period just ended:
Actual units produced: 12,000
Actual fixed overhead incurred: $730,000
Actual machine hours worked: 60,000
Budgeted fixed overhead: $720,000
Planned level of machine-hour activity: 50,000
If Campaign estimates four hours to manufacture a completed unit, the company's standard fixed overhead rate per machine hour would be:

• A) $12.00.
• B) $14.40.
• C) $14.60.
• D) $15.00.
• E) None of the answers is correct.

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Definitions:

Unrealized Profits

Gains on transactions that have occurred but have not yet been realized through the receipt or payment of cash.

Gross Margin

The difference between revenue and cost of goods sold, which indicates how much a company earns from its core operations.

Effective Tax Rate

The average rate at which an individual or corporation is taxed, considering all forms of taxes.

Investment Account

An account held at a financial institution that holds investments such as stocks, bonds, mutual funds, and other assets for the benefit of the investor.