Traeger Woodworking Corporation Produces Fine Cabinets

question 35

Multiple Choice

Traeger Woodworking Corporation produces fine cabinets.The company uses a job-order costing system in which its predetermined overhead rate is based on capacity.The capacity of the factory is determined by the capacity of its constraint,which is an automated bandsaw.Additional information is provided below for the most recent month:
The cost of unused capacity that would be reported as a period expense on the income statement prepared for internal management purposes would be closest to:

• A) $1,924
• B) $18,136
• C) $0
• D) $18,765

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