Figure 4 Wheat Manufacturing Has Four Categories of Overhead. the Four Categories

question 71

Multiple Choice

Figure 4
Wheat 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, 20,000 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 15 percent.
Estimates for the proposed job are as follows:
In the past, full manufacturing cost has been calculated by allocating overhead using a volume-based cost driver--direct labour hours. 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 4. If Wheat Manufacturing used activity-based cost drivers to assign overhead and the company's bid is full cost plus 15 percent, the company's bid would be

• A) £12,696.00
• B) £13,965.60
• C) £10,120.00
• D) £9,936.00

Understand the classification and accounting for held-to-maturity securities.

Recognize the nature of multinational corporations and their operations.

Comprehend how interest revenue is recorded for long-term investments.

Recognize the significance of the net profit margin as a financial metric.

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Definitions:

Futures

Standardized contracts to buy or sell a specific asset at a predetermined price at a specified future date, used for hedging or speculation.

Forwards

A contract between two parties to buy or sell an asset at a specified price on a future date.

Swaps

Agreements to exchange two securities or currencies.

Profiling An Option

This term is not widely recognized in standard financial terminology. NO.