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Vektek Inc

question 14

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Vektek Inc.thinks machine hours is the best activity base for its manufacturing overhead.The estimate of annual overhead costs for its jobs was $2050000.The company used 1000 hours of processing on Job No.B12 during the period and incurred overhead costs totaling $2100000.The estimated machine hours for the year totaled 20000.How much overhead should be applied to Job No.B12?


Definitions:

Margin of Safety

The difference between actual or expected sales and sales at the break-even point. It measures how close a company is to not covering its fixed costs.

Break-even Sales

The amount of revenue from sales that exactly covers the fixed and variable costs of producing and selling a product, with no profit or loss.

Pretax Net Income

The amount of money a company has earned before taxes are deducted.

Fixed Costs

Expenses that do not fluctuate with the volume of production or sales, such as rent, salaries, and insurance.

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