KL Textiles Writes 22 Checks a Day for an Average

question 77

Multiple Choice

KL Textiles writes 22 checks a day for an average amount of $827 each.These checks generally clear the bank 3.5 days after they are written.In addition, the firm generally receives an average of $23,902 a day in checks.Deposited amounts are available after one day.What is the amount of the firm's disbursement float?

• A)$11,951
• B)$23,902
• C)$39,777
• D)$29,840
• E)$63,679

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Definitions:

Predetermined Overhead Rate

A calculated rate used to allocate manufacturing overhead costs to products or job orders, based on a specific activity basis.

Variable Overhead

Costs that fluctuate with the level of production output, such as utilities or materials, unlike fixed overhead costs.

Total Overhead Variance

The difference between the actual overhead costs incurred and the overhead costs that were applied or allocated based on standard costing procedures.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the quantity that should have been used, valued at the standard cost.