Davie Company Used Estimated Direct Labor Hours of 250,000 and Estimated

question 71

Multiple Choice

Davie Company used estimated direct labor hours of 250,000 and estimated manufacturing overhead costs of $1,000,000 in establishing its 2015 predetermined overhead allocation rate. Actual results showed: $$\begin{array} { | l | l | } \hline \text { Actual manufacturing overhead } & \$ 900,000 \\\hline \text { Allocated manufacturing overhead } & \$ 875,000 \\\hline\end{array}$$ What was the number of direct labor hours worked during 2015?

• A) 225,000 hours
• B) 243,056 hours
• C) 250,000 hours
• D) 218,750 hours

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Definitions:

Emissions Tax

A tax imposed on the emission of pollutants, aimed at reducing environmental harm.

Optimal Tax

A tax system designed to achieve the best balance between efficiency and equity.

Marginal Social Benefit

The supplementary gain for society derived from the consumption of one extra unit of a good or service.

Marginal Social Cost

The cost to society of producing an additional unit of a good or service, including both private costs and any externalities.