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Megan, Inc

question 76

Multiple Choice

Megan, Inc. uses the following standard costs per unit for one of its products: Direct labor (2.0 hrs. @ $5.00/hr.) = $10.00; overhead (2.0 hrs. @ $2.50/hr.) = $5.00. The flexible budget for overhead is $120,000 plus $1.00 per direct labor hour (DLH) . Actual data for the past month show total overhead costs of $225,000, total fixed overhead of $123,000, 85,000 hours worked, and 40,000 units produced.

What is the budgeted denominator activity level for Megan, Inc., in direct labor hours (DLHs) , to the nearest whole number?

Definitions:

Times Interest Earned

A financial ratio measuring a company's ability to meet its interest obligations from operating earnings, calculated as income before interest and taxes divided by interest expense.

Interest Expense

The financial outlay associated with an entity's use of borrowed resources over time.

Times Interest Earned Ratio

A financial metric used to measure the company's ability to meet its debt obligations by comparing its income before interest and taxes to its interest expenses.

Interest Expense

The cost incurred by an entity for borrowed funds, typically reflected in income statements as a cost of financing operations.