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

question 80

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.

-What is the total fixed overhead cost for O'Donnell?

• A) $55,000.
• B) $60,000.
• C) $115,000.
• D) $130,000.

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Definitions:

Exponentially Distributed

Describes the time between events in a Poisson process, where events occur continuously and independently at a constant average rate.

Probability Density Function

A mathematical function that describes the likelihood of different possible outcomes in a continuous random variable.

Exponential Distribution

A continuous probability distribution that is used to model the time between events in a Poisson point process.

Poisson Model

A statistical model used to predict the number of events occurring within a fixed interval of time or space, assuming events occur with a known constant rate and independently of the time since the last event.