Figure 2 The Management of Chott Industries Predicted That Overhead Cost Would

question 42

Multiple Choice

Figure 2
The management of Chott Industries predicted that overhead cost would total £180,000 for the current year. Management further estimated that under absolutely perfect conditions they could produce 25,000 units. Under efficient conditions, they can produce 23,000 units. The product is expected to appeal to the public for approximately three years during which time Chott expects to sell a total of 60,000 units. Because poor economic conditions are forecast for the upcoming year, Chott plans to produce only 18,000 units.
-Refer to Figure 2. What will Chott's overhead application rate be if Chott uses the expected activity level?

• A) £10.00
• B) £7.20
• C) £7.83
• D) £9.00

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Definitions:

International Trade

The exchange of goods and services between countries, across their international borders.

Relative Demand

It refers to the demand for a good or service compared to another, showing how the demand for one product varies as the demand for another changes.

Skilled Labors

Workers with specialized training, expertise, and experience that enable them to perform complex tasks.

Compensating Differential

The additional amount of income that an employee requires to accept a job that entails less desirable aspects, such as longer hours or higher risks.