Answer the Following Questions Using the Information Below: Beta Corporation

question 84

Multiple Choice

Answer the following questions using the information below: Beta Corporation uses a job cost system and has two production departments,A and B.Budgeted manufacturing costs for the year are:
$$\begin{array}{l}\begin{array} { lc c } &\text { Department A } & \text { Department B } \\\text { Direct materials } & \$ 800,000 & \$ 200,000 \\\text { Direct manufacturing labor } & \$ 200,000 & \$ 900,000 \\\text { Manufacturing overhead } & \$ 500,000 & \$ 450,000\end{array}\end{array}$$ The actual material and labor costs charged to Job #432 were as follows:
$\begin{array}{ll}&\text { Total }\\\text { Direct materials: }&\$25,000\\\text { Direct labor: }\\\text { Department A } & \$ 10,000 \\\text { Department B } & \$ 12,000 \\& \$ 22,000\end{array}$ Beta applies manufacturing overhead costs to jobs on the basis of direct manufacturing labor cost using departmental rates determined at the beginning of the year.
Proportion of manufacturing overhead with respect to the total cost of the job is ________.

• A) 39.74%
• B) 38.62%
• C) 26.62%
• D) 42%

---

Definitions:

IRR

Internal Rate of Return; a financial metric used to evaluate the profitability of a potential investment, calculating the discount rate at which the net present value of costs and benefits equals zero.

Cost of Capital

The necessary rate of earnings a firm must obtain from its investments to preserve its market worth and secure capital.

Initial Investment

The amount of money invested at the start of a project or business venture to get it off the ground.

Positive Future Cash Flows

The expectation or projection of an increase in the amount of money flowing into a company over a period of time, typically resulting from operations, investments, or financing activities.