The Management of Featheringham Corporation Would Like to Investigate the Possibility

question 344

Multiple Choice

The management of Featheringham Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The company's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 62,000 machine-hours. Capacity is 75,000 machine-hours and the actual level of activity for the year is assumed to be 59,000 machine-hours. All of the manufacturing overhead is fixed and both the estimated amount at the beginning of the year and the actual amount at the end of the year are assumed to be $2,836,500 per year. It is assumed that a number of jobs were worked on during the year, one of which was Job Z77W which required 410 machine-hours.If the company bases its predetermined overhead rate on capacity, then the amount of manufacturing overhead charged to job Z77W is closest to:

• A) $15,506.20
• B) $19,065.00
• C) $20,051.12
• D) $19,711.27

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Definitions:

Distributive Bargaining Strategy

A negotiation approach focusing on dividing a fixed amount of resources, often resulting in a win-lose outcome for the parties involved.

Social Norms

Shared, unwritten rules that dictate the behavior of people in a society or group, influencing actions and attitudes.

Integrative Way

An approach aimed at problem-solving and negotiation that seeks mutually beneficial outcomes for all parties involved, focusing on common interests rather than opposing positions.

BATNA

Best Alternative to a Negotiated Agreement, the most advantageous alternative course of action a party can take if negotiations fail and an agreement cannot be reached.