The Management of Plitt Corporation Would Like to Investigate the Possibility

question 308

Multiple Choice

The management of Plitt 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 58,000 machine-hours. Capacity is 78,000 machine-hours and the actual level of activity for the year is assumed to be 75,500 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 $4,704,960 per year. It is assumed that a number of jobs were worked on during the year, one of which was Job Q20L which required 440 machine-hours.If the company bases its predetermined overhead rate on capacity, then the amount of manufacturing overhead charged to Job Q20L is closest to:

• A) $35,692.80
• B) $20,388.96
• C) $27,419.63
• D) $26,540.80

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Definitions:

Criteria Used

The standards or benchmarks employed to evaluate or judge something.

Relations-Oriented Behavior

Leadership behavior characterized by focusing on the development and management of interpersonal relationships within the team or organization.

Maintenance Behavior

Actions taken to preserve and sustain desired conditions or states in various contexts, including personal well-being, relationships, and physical assets.

Change-Oriented Behavior

Actions and activities that individuals or groups undertake with the intention of bringing about alteration in the current state of affairs or status quo.