A Machine Shop Has Direct Materials Cost of $1,800,000 Direct

question 26

Multiple Choice

A machine shop has direct materials cost of $1,800,000 direct labour of $4,200,000 (direct labour rate is $50 per hour) and budgeted indirect manufacturing costs of $850,000.Management believes that indirect manufacturing costs increase with direct labour hours.What is the budgeted indirect manufacturing cost rate?

• A)$2.12
• B)$2.33
• C)$4.94
• D)$10.12
• E)$17.00

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Definitions:

Published

Made available to the public through print or electronic media.

Business Revenue

The total amount of income generated by a company from its activities, such as sales of products or services, before any expenses are subtracted.

Schedule E

A form used for reporting income from rental real estate, royalties, partnerships, S corporations, estates, trusts, and residual interests in REMICs on a tax return.

Investment Expenses

Fees and other costs incurred in connection with the management and operation of investments.