In the O'Donnell Manufacturing Company, at an Activity Level of 80,000

question 54

Multiple Choice

In the O'Donnell Manufacturing Company, at an activity level of 80,000 machine hours, total overhead costs were $223,000. Of this amount, utilities were $48,000 (all variable) and amortization was $60,000 (all fixed) . The balance of the overhead costs consisted of maintenance cost (mixed) . At 100,000 machine hours, maintenance costs were $130,000.
Assume that all of the activity levels mentioned in this problem are within the relevant range.

-If 110,000 machine hours of activity are projected for next period,what would be total expected overhead cost?

• A) $242,500.
• B) $256,000.
• C) $263,500.
• D) $306,625.

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Definitions:

Drawing Account

A specific account used to record amounts withdrawn by the owner(s) of a business for personal use.

Withdrawals

Amounts taken from a business by its owner(s) for personal use.

Expenses

Costs incurred by a business in the process of earning revenue.

Consuming Services

Consuming services refers to the use of services provided by businesses or individuals which are utilized and exhausted during the process, such as electricity, consulting, or maintenance services.