Machine Builders Inc

question 8

Multiple Choice

Machine Builders Inc. adopted a standard cost system several years ago that it uses in conjunction with its process cost system. The per-unit standard costs for direct materials and direct labor for its single product are as follows:The actual total cost of direct materials used in production during July, to the nearest dollar, was:

• A) $282,150.
• B) $287,850.
• C) $297,000.
• D) $300,000.
• E) $303,000.

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Definitions:

Overhead

The indirect costs of running a business that cannot be directly linked to a specific product or service, such as utilities, rent, and administrative expenses.

Activity Rate

The predetermined overhead rate used in activity-based costing to assign overhead costs to products or services based on a specific activity.

Machine Setups

The process and associated costs of configuring machinery to produce a specific product or batch of products.

Activity Cost Pool

A compilation of all the costs related to a specific activity or process in cost accounting.