The Heartmore Organization Uses a Single Cost Allocation Base

question 92

Multiple Choice

The Heartmore Organization uses a single cost allocation base.The management accountants group all budgeted indirect costs of $4,000,000 into a single overhead cost pool.They also reported a budget of 40,000 direct manufacturing labor-hours during the same period.
Required:
What is the rate per direct manufacturing labor-hour?

• A)$50 per direct manufacturing labor-hour.
• B)$75 per direct manufacturing labor-hour.
• C)$100 per direct manufacturing labor-hour.
• D)$125 per direct manufacturing labor-hour.
• E)$150 per direct manufacturing labor-hour.

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Definitions:

Free Cash Flow

The amount of cash generated by a company after accounting for capital expenditures necessary to maintain or expand the asset base.

Market Capitalization Rate

The expected return on an investment in a company, based on its current market capitalization and future profit projections.

FCFE

Free Cash Flow to Equity, a measure of how much cash is available to the equity shareholders of a company after all expenses, reinvestment, and debt payments.

Intrinsic Value

Intrinsic Value is the actual value of a company, stock, currency, or product determined through fundamental analysis without reference to its market value.