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:

Abductive Reasoning

A form of logical reasoning that starts with an observation or set of observations then seeks to find the simplest and most likely explanation.

Deduction

The process of reasoning from general principles to specific cases, or the subtraction of expenses from income to determine taxable income.

Induction

The process of introducing a new employee to their job and the organization, involving training and information sessions.

Analogy

Examining and contrasting two objects, typically to explain or shed light on them.