Anton Believes His Company's Overhead Costs Are Driven (Affected) by the Number

question 40

Multiple Choice

Anton believes his company's overhead costs are driven (affected) by the number of machine hours because the production process is heavily automated. During the period, the company produced 3,500 units of Product A requiring a total of 300 machine hours and 2,500 units of Product B requiring a total of 75 machine hours. What allocation rate should be used if the company incurs overhead costs of $16,875?

• A) $45 per machine hour
• B) $2.81 per machine hour
• C) $2.81 per unit
• D) $45 per unit

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Definitions:

Voluntary Agreement

A consensual arrangement between parties, often formalized through a contract, without coercion or duress.

Bankruptcy

A judicial process concerning an individual or business that is incapable of paying off its accumulated debts.

Debts Reduced

A situation where the total amount owed by an individual or entity is decreased through negotiation, settlement, or by making payments.

Liability

An obligation or debt owed by an individual or company, typically financial, that arises from past transactions or actions.