Answer the Following Questions Using the Information Below:
Botany Bay

question 151

Multiple Choice

Answer the following questions using the information below:
Botany Bay Boatbuilders uses departmental cost driver rates to allocate manufacturing overhead costs to products.Manufacturing overhead costs are allocated on the basis of machine-hours in the Machining Department and on the basis of direct labour-hours in the Assembly Department.At the beginning of 2010,the following estimates were provided for the coming year:
$$\begin{array}{l}\begin{array} { l l l } & \text { Machining } & \text { Assembly } \\\text { Direct labour-hours } & 30000&60000 \\\text { Machine-hours } & 80000&20000 & \\\text { Direct labour cost } & \$ 500000 & \$ 900000 \\\text { Manufacturing overhead costs } & \$ 420000 & \$ 240000\end{array}\\\\\text { The accounting records of the company show the following data for Job \#316: }\end{array}$$

$\begin{array}{lcc}& \text { Machining } & \text { Assembly } \\ \text { Direct labour-hours } & 120 & 70 \\\text { Machine-hours } & 60 & 5\\\text { Direct material cost } & \$ 300 & \$ 200 \\\text { Direct labour cost } & \$ 100 & \$ 400 \end{array}$
-For Botany Bay Boatbuilders,what is the annual manufacturing overhead cost-allocation rate for the Machining Department?

• A)$4.00
• B)$4.67
• C)$4.20
• D)$5.25

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Definitions:

Market Economy

An economic system where supply and demand from consumers and businesses drive the production and allocation of resources and services, with minimal government intervention.

Market Failure

A circumstance where goods and services are distributed ineffectively by a market operating without restrictions, commonly leading to a decline in social welfare.

Allocate Resources

The process of distributing available resources among various competing needs and wants in order to achieve desired outcomes efficiently and effectively.

Efficiently

Attaining the highest level of efficiency by minimizing unnecessary effort or cost.