The Following Information Is Available Pertaining to the Production Division

question 97

Multiple Choice

The following information is available pertaining to the Production Division:
$\begin{array}{lrrr}&\text { Mixing Dept. }&\text { Finishing Dept. }&\text { Total }\\\text { Overhead costs } & \$ 7,500 & \$ 22,500 & \$ 30,000 \\\text { Direct labour hours } & 7,500 & 2,500 & 10,000 \\\text { Machine hours } & 2,500 & 7,500 & 10,000\end{array}$

$\text { Production information pertaining to Job } 4 \text { X5: }$
$\begin{array}{lrrr}&\text { Mixing Dept. }&\text { Finishing Dept. }&\text { Total }\\\text { Prime costs } & \$ 1,250 & \$ 0 & \$ 1,250 \\\text { Direct labour hours } & 250 & 0 & 250 \\\text { Machine hours } & 1 & 0 & 1 \\\text { Units produced } & 500 & 0 & 500\end{array}$
-Refer to the figure.What is the overhead rate for the Finishing Department based on machine hours?

• A)$1.00
• B)$2.25
• C)$3.00
• D)$9.00

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Definitions:

Promissory Note

A financial instrument that contains a written promise by one party to pay another party a definite sum of money either on demand or at a specified future date.

Banker's Acceptance

A banker's acceptance is a short-term financial instrument issued by a company and guaranteed by a bank, often used in international trade.

5 C's of Credit

The five key elements lenders evaluate to assess a borrower's creditworthiness: character, capacity, capital, collateral, and conditions.

Capacity

The maximum level of output that a company can sustain to produce within a specified period under normal conditions.