Tanner Tavern Writes Four Checks a Day for an Average

question 81

Multiple Choice

Tanner Tavern writes four checks a day for an average amount of $5,400 each.These checks generally clear the bank four days after they are written.In addition,the firm generally receives and deposits checks amounting to $18,700 each day.All deposits are available on the next day.What is the firm's net float?

• A)Net collection float of $13,200
• B)Net collection float of $18,700
• C)Net collection float of $22,300
• D)Net disbursement float of $67,700
• E)Net disbursement float of $86,400

---

Definitions:

Activity-Based Costing

A costing method that assigns overhead and indirect costs to specific activities, improving the accuracy of product and service costing.

Manufacturing Overhead

All indirect costs associated with the manufacturing process, such as factory rent, utilities, and salaries of indirect labor.

Activity-Based Costing

A method of costing that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption.

Batch Setup

Batch setup refers to the process and the activities involved in preparing equipment or a production area for manufacturing a specific batch of products.