Petraeus Fabrication Company Has Provided the Following Information for the Year

question 59

Multiple Choice

Petraeus Fabrication Company has provided the following information for the year 2012: Based on the above information, what was Petraeus's allocation rate? (Hint: for this type of problem, the "trial and error" method may be used.)

• A)$95 per direct labor hour
• B)180% of direct labor cost
• C)$8.50 per machine hour
• D)12% of direct materials cost

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Definitions:

Equity Method

An accounting technique used for recording investments in which the investor has significant influence but not total control over the investee.

Deferred Income Tax

An accounting concept that represents the difference between taxes payable and tax expense due to timing differences in recognizing revenues and expenses.

Tax Rate

The rate at which taxes are levied on an individual or a company's income.

Equity Method

An accounting technique used to record investments in other companies, where the investment is significant but does not result in full control or majority ownership, typically 20% to 50% of the investee's voting stock.