Figure 3 Ray Manufacturing Has Four Categories of Overhead. the Four Categories

question 10

Multiple Choice

Figure 3
Ray Manufacturing has four categories of overhead. The four categories and the expected overhead costs for each category for next year are as follows:
Currently, overhead is applied using a predetermined overhead rate based upon budgeted direct labour hours. For next year, 100,000 direct labour hours are budgeted.
The company has been asked to submit a bid for a proposed job. The plant manager feels that obtaining this job would result in new business in future years. Usually bids are based upon full manufacturing cost plus 10 percent.
Estimates for the proposed job are as follows:
The plant manager has heard of a new way of applying overhead that uses cost pools and cost drivers. Expected activity for the four activity-based cost drivers that would be used are as follows:

-Refer to Figure 3 above. If Ray Manufacturing used number of setups to assign setup costs, the amount of setup costs allocated to the proposed job would be

• A) £2,880
• B) £1,920
• C) £480
• D) £300

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Definitions:

Polymers

Large molecules composed of repeated subunits, which can be natural, like DNA, or synthetic, like plastic.

Monomers

The basic building block units of polymers, which can bind chemically to other monomers to form complex structures.

Energy Source

A system or material that provides power for activity and functioning, such as fossil fuels, solar power, or food for biological organisms.

Biological Molecule

Compounds that are vital for the existence and function of living organisms, including proteins, carbohydrates, lipids, and nucleic acids.