The Following Information Pertains to Utter Company: Utter Company

question 17

Multiple Choice

The following information pertains to Utter Company: Utter Company does not divide costs into fixed and variable components.Personnel costs are allocated based on the number of employees,and maintenance costs are allocated based on machine hours.
Predetermined overhead rates for fabrication and assembly are based on direct labour hours.(Round amounts to dollars.)
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If the direct method is used to allocate support department costs,what would be the predetermined overhead rate for the Fabrication Department (rounded to two decimal places) ?

• A)$5.40
• B)$7.28
• C)$24.78
• D)$28.80

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Definitions:

Common Stock

Equity securities representing ownership in a corporation, giving shareholders voting rights and a share in the company's profits through dividends.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often receiving dividends before common shareholders.

Subscriptions Receivable-Common Stock

The amount owed to a company from subscribers who have committed to buy its common stock but have not yet paid.

Common Stock Subscribed

Temporary stockholders’ equity account that records at par value stock that has been subscribed to but not fully paid for.