Gray Company Uses a Plantwide Overhead Rate with Machine Hours

question 129

Multiple Choice

Gray Company uses a plantwide overhead rate with machine hours as the allocation base. Use the following information to solve for the amount of machine hours estimated per unit of product Q.

• A) 50 MH per unit of Q.
• B) .50 MH per unit of Q.
• C) .75 MH per unit of Q.
• D) 17.5 MH per unit of Q.
• E) 30 MH per unit of Q.

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Definitions:

Physical Count

An actual count of merchandise or inventory on hand, often conducted at the end of an accounting period to verify the accuracy of records.

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated as beginning inventory plus purchases minus cost of goods sold.

Net Realizable Value

Net Realizable Value is the estimated selling price of goods, minus the estimated costs of completion and necessary selling costs, used for inventory valuation and accounts receivable.

Inventory

The merchandise and supplies a company maintains with the end purpose of selling or manufacturing.