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:

Hearing Protection

Devices or equipment worn to reduce the level of sound entering the ears, essential in environments with potentially harmful noise levels.

Pneumatic Tools

Tools powered by compressed air, used in various applications including construction and manufacturing for tasks like drilling, hammering, and painting.

Dynamometer

A device used to measure the force, torque, or power output of an engine, motor, or other rotating machines.

Toxic

Poisonous.