(Appendix 2B) the Management of Plitt Corporation Would Like to Investigate

question 24

Multiple Choice

(Appendix 2B) The management of Plitt Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The company's controller has provided an example to illustrate how this new system would work. In this example, the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 69,000 machine-hours. Capacity is 82,000 machine-hours and the actual level of activity for the year is assumed to be 72,400 machine-hours. All of the manufacturing overhead is fixed and both the estimated amount at the beginning of the year and the actual amount at the end of the year are assumed to be $4,130,340 per year. It is assumed that a number of jobs were worked on during the year, one of which was Job Q20L which required 470 machine-hours.
-If the company bases its predetermined overhead rate on capacity,then the predetermined overhead rate is closest to:

• A) $57.05 per machine-hour
• B) $59.86 per machine-hour
• C) $50.37 per machine-hour
• D) $60.83 per machine-hour

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Definitions:

School Assignments

Tasks or projects given to students by teachers as part of their course of study.

Anxious Temperament

A predisposition to respond to potential threats with increased anxiety, reflecting a stable trait rather than a momentary state.

Behavioural Inhibition

A temperament in early childhood that may be related to anxiety disorders later in life, characterized by profound avoidance of others in preschool, and atypical autonomic nervous system responses to novelty.

Anxiety Disorder

A mental health condition characterized by excessive fear or worry that interferes with daily activities.