The Adlake Company Makes and Sells a Single Product and Uses

question 7

Multiple Choice

The Adlake Company makes and sells a single product and uses a standard cost system.During October,the company budgeted $300,000 in manufacturing overhead cost at a denominator activity of 20,000 machine hours.At standard,each unit of finished product requires 5 machine hours.The following cost and activity were recorded during October: $\begin{array}{l}\begin{array}{lll}\text { Total Actual Manufacturing Overhead Cost Incurred}\\\text { Units of Product Completed}\\\text { Actual Machine Hours Worked}\\\end{array}\begin{array}{lll}\$ 294,000 \\3,800 \\19,422\end{array}\end{array}$ What was the amount of overhead cost that the company applied to work in process for October?

• A) $279,300.
• B) $285,000.
• C) $291,330.
• D) $294,000.

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Definitions:

Disposable Income

Disposable income refers to the sum of money that families can use for expenditures and savings once income taxes are deducted.

MPS (Marginal Propensity to Save)

The proportion of an increase in income that an individual or population saves rather than spends on consumption.

APC (Average Propensity to Consume)

The fraction of income that households plan to spend on goods and services; it is the ratio of total consumption to total disposable income.

Disposable Income

Refers to the amount of money that households have available for spending and saving after income taxes have been accounted for.