Webb CoAcquired 100% of Rand Inc

question 82

Multiple Choice

Webb Co.acquired 100% of Rand Inc.on January 5, 2018.During 2018, Webb sold goods to Rand for $2,400,000 that cost Webb $1,800,000.Rand still owned 40% of the goods at the end of the year.Cost of goods sold was $10,800,000 for Webb and $6,400,000 for Rand.What was consolidated cost of goods sold?

• A) $17,200,000.
• B) $15,040,000.
• C) $14,800,000.
• D) $15,400,000.
• E) $14,560,000.

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Definitions:

Allocation Basis

A criterion or method used to allocate or distribute costs among different departments, products, or activities based on certain factors or proportions.

Overhead Costs

Overhead costs are the indirect expenses associated with running a business that are not directly tied to a specific product or service, including utilities, rent, and management salaries.

Plantwide Overhead Rate

A single overhead absorption rate used throughout an entire factory or plant to allocate overhead costs to production activities.

Machine Hours

A measure of production time, calculated as the total number of hours machines are operated in the production process.