Exhibit 3-1 Hydrate Inc.makes Two Types of Sports Drinks and Is Implementing

question 43

Multiple Choice

Exhibit 3-1
Hydrate Inc.makes two types of sports drinks and is implementing an activity-based costing system.Previously,all overhead had been applied on the basis of machine hours.The company produces 22,500 units of Sports Light and 42,284 units of Thirst Quench.Additional data is as follows:

-Refer to Exhibit 3-1.What is the total overhead cost applied to Thirst Quench using activity-based costing?

• A)$52,868
• B)$21,142
• C)$34,322
• D)$10,000
• E)None of the answer choices is correct.

---

Definitions:

Adjusting Entries

Entries in accounting made at the period's end to assign earnings and costs to their respective actual periods.

Income Statement Accounts

Accounts found on the income statement, which report a company’s financial performance over a specific period, including revenues, expenses, gains, and losses.

Temporary Accounts

Accounts in accounting that are used to track transactions within a financial period, which are then transferred to permanent accounts at the end of the period.

Interest Expense

The cost incurred by an entity for borrowed funds, which may include the cost of bonds, loans, convertible debt, and lines of credit.