Recht Corporation Bases Its Predetermined Overhead Rate on Variable Manufacturing

question 173

Multiple Choice

Recht Corporation bases its predetermined overhead rate on variable manufacturing overhead cost of $9.30 per machine-hour and fixed manufacturing overhead cost of $17,940 per period.If the denominator level of activity is 1,200 machine-hours,the fixed element in the predetermined overhead rate would be:

• A) $14.95
• B) $930.00
• C) $24.25
• D) $9.30

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Definitions:

Market Price

The existing rate at which a product or service is available for buying or selling within a marketplace.

Demand

Demand is the quantity of a good or service that consumers are willing and able to purchase at various prices within a given time frame, reflecting their desire and purchasing power.

Profit-Maximizing Output

The point of production where a company reaches its maximum profit potential.

Short Run

A period in which at least one input (e.g., capital) is fixed, limiting the capacity for output adjustment.