Simplex Company Has the Following Estimated Costs for Next Year

question 11

Multiple Choice

Simplex Company has the following estimated costs for next year:
Simplex estimates that 10,000 direct labour and 16,000 machine hours will be worked during the year.If overhead is applied on the basis of machine hours,what will be the overhead rate per hour?

• A) $3.50.
• B) $6.94.
• C) $7.63.
• D) $8.56.

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Definitions:

Producer Surplus

The difference between what producers are willing to accept for a good versus what they actually receive, due to higher market price.

Individual Producer Surplus

The net gain to an individual seller from selling a good; equal to the difference between the price received and the seller’s cost.

Phantom Tickets

Tickets for an event that are sold or promised to a customer but actually do not exist or are not available.

Producer Surplus

Producer surplus refers to the difference between what producers are willing to accept for a good or service versus what they actually receive, essentially measuring the benefit or surplus producers gain from transactions.