Star Corporation Manufactures Custom Molds for Use in the Extrusion

question 28

Multiple Choice

Star Corporation manufactures custom molds for use in the extrusion industry.The company allocates manufacturing overhead based on machine hours.Selected data for costs incurred for Job 732 are as follows: $\begin{array}{|l|c|}\hline \text { Direct materials used } & \$ \quad 5,600 \\\hline \text { Direct labor cost } &\$ 2,500 \\\hline \begin{array}{l}\text { Predetermined manufacturing overhead rate based on } \\\text { machine hours }\end{array} & \$12 \\\hline \text { Direct labor hours worked } & 250 \\\hline \text { Machine hours used } & 300 \\\hline\end{array}$ What is the manufacturing cost of Job 732?

• A)$ 8,100
• B)$11,700
• C)$11,100
• D)$ 3,600

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Definitions:

Precautionary Cash Balances

Precautionary cash balances refer to money held by both businesses and individuals to meet unexpected expenses or financial emergencies.

Unexpected Expenditures

Expenses that were not planned or budgeted for, often requiring immediate payment.

Risk-Averse

A description of an investor or decision-maker who prefers to minimize uncertainty or potential loss, favoring safer over riskier options.

Financial Intermediary

An institution that acts as a middleman between savers and borrowers, including banks, investment companies, and insurance companies.