The Following Cost Functions Were Developed for Manufacturing Overhead Costs

question 27

Multiple Choice

The following cost functions were developed for manufacturing overhead costs: $$\begin{array} { l l } \text { Manufacturing Overhead Cost } & \text { Cost Function } \\\text { Electricity } & \$ 200 + \$ 20 \text { per direct labour hour } \\\text { Maintenance } & \$ 400 + \$ 30 \text { per direct labour hour } \\\text { Supervisors' salaries } & \$ 20000 \text { per month } \\\text { Indirect materials } & \$ 16 \text { per direct labour hour }\end{array}$$ If June production is expected to be 2,000 units requiring 3,000 direct labour hours,what would be the estimated manufacturing overhead costs?

• A)$20,733
• B)$152,600
• C)$198,000
• D)$218,600

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Definitions:

Cash Flow

Cash flow refers to the net amount of cash being transferred in and out of a business, indicating its financial health.

Net Present Value

A method used in capital budgeting to assess the profitability of an investment, by discounting future cash flows to their present value and subtracting the initial investment cost.

Canadian Dollars

The official currency of Canada, denoted as CAD.

Mexican Pesos

The currency of Mexico, used in financial transactions within the country.