Compute the Equity in Earnings of Gargiulo Reported on Posito's

question 49

Multiple Choice

Compute the equity in earnings of Gargiulo reported on Posito's books for 2017.

• A) $63,000.
• B) $62,730.
• C) $63,270.
• D) $70,000.
• E) $62,700.

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Definitions:

Predetermined Overhead Rate

This rate is calculated before the period begins and is used to apply manufacturing overhead costs to products based on a consistent formula.

Fixed Manufacturing Overhead

Costs in manufacturing that do not vary with the level of production, including factory rent, salaries of permanent staff, and equipment depreciation.

Machine-Hours

A measure of the amount of time machines are operated in the manufacturing process, used as a basis for allocating costs.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate manufacturing overhead costs to products based on a selected activity base such as labor hours or machine hours.