Fixed Manufacturing Overhead Costs Remain Constant at $400,000 Per Month

question 40

Multiple Choice

Fixed manufacturing overhead costs remain constant at $400,000 per month and are allocated based on a monthly professional labor-hour allocation rate.Professional labor hours are estimated at 12,000 for high-output months and 3,000 for low-output months.The final customer price includes a markup of 50% of cost.As a result:

• A)low-output months will allocate less manufacturing overhead costs to each job.
• B)low-output months will deter customers due to the higher prices.
• C)the high-output months present a more accurate method of pricing.
• D)an annual allocation rate would result in lower prices during the high-output months than the monthly allocation rate.

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Definitions:

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The enduring behaviors, ideas, attitudes, values, and traditions shared by a group of people and transmitted from one generation to the next.

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The highest point or maximum level of something, often referring to the top of a mountain or the highest level of achievement or performance.