The Management of Featheringham Corporation Would Like to Investigate the Possibility

question 18

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, what would be the cost of unused capacity reported on the income statement prepared for internal management purposes?

• A) $137,250
• B) $605,120
• C) $491,660
• D) $467,870

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Definitions:

Emotional Experience

The complex state of feeling resulting from psychological interactions with one's environment, often involving physiological changes.

Facial Expressions

The movements or positions of the face that convey a person's emotions, thoughts, or intentions, often universally recognized across cultures.

Emotional Experience

The complex psychological state involving thoughts, feelings, physiological changes, and behaviors in response to a situation.

Galvanic Skin Response

A method of measuring the electrical conductance of the skin, which varies with its moisture level, often used as an indicator of emotional arousal.