(Appendix 2B) Dunnings Woodworking Corporation Produces Fine Cabinets

question 40

Multiple Choice

(Appendix 2B) Dunnings 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 router. Additional information is provided below for the most recent month:

-The predetermined overhead rate based on hours at capacity is closest to:

• A) $84.60 per hour
• B) $61.10 per hour
• C) $61.54 per hour
• D) $44.44 per hour

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Definitions:

Cash

Cash refers to money in the form of currency, including coins and banknotes, that can be used immediately for transactions.

Expense

An outflow of money or other resources incurred as a result of the company’s operations to generate revenue, representing the cost of doing business.

Prepaid Insurance

An asset account that represents insurance payments made in advance for future coverage periods.

Insurance Expense

The cost incurred by a company to insure its assets, operations, or liabilities against various risks over a specific period.