Challenger Factory Produces Two Similar Products - Regular Widgets and Deluxe

question 107

Multiple Choice

Challenger Factory produces two similar products - regular widgets and deluxe widgets. The total plant overhead budget is $675,000 with 300,000 estimated direct labor hours. It is further estimated that deluxe widget production will need 3 direct labor hours for each unit and regular widget production will require 2 direct labor hours for each unit.
Using the single plantwide factory overhead rate with an allocation base of direct labor hours, how much factory overhead will Challenger Factory allocate to regular widget production if budgeted production for the period is 75,000 units and actual production for the period is 72,000 units?

• A) $168,750
• B) $324,000
• C) $162,000
• D) $337,500

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Definitions:

Fair Value Enterprise Method

is a valuation approach used to measure the value of a business by assessing the present value of its expected future earnings.

Non-Controlling Interest

The portion of equity interest in a subsidiary not attributable to the parent company, reflecting the minority shareholders' ownership.

Shareholders' Equity

The amount that would be returned to shareholders if all the company's assets were liquidated and all its debts repaid.

Identifiable Net Assets

The assets of a company that can be clearly identified and quantified on the balance sheet, excluding goodwill.