The Following Information Relates to Webster Ltd How Much Was Webster's Manufacturing Overhead?
A) $22,240
B) $62,270

question 124

Multiple Choice

The following information relates to Webster Ltd:
$$\begin{array} { | l | l | } \hline \text { Advertising costs } & \$ 13,200 \\\hline \text { Sales salary } & 13,400 \\\hline \text { Sales revenue } & 470,000 \\\hline \text { President's salary } & 60,000 \\\hline \text { Office rent } & 53,500 \\\hline \text { Manufacturing equipment depreciation } & 3000 \\\hline \text { Indirect materials } & 3600 \\\hline \text { Indirect labour } & 12,800 \\\hline \text { Factory repair and maintenance } & 840 \\\hline \text { Direct materials } & 30,870 \\\hline \text { Direct labour } & 31,400 \\\hline \text { Delivery vehicle depreciation } & 910 \\\hline \text { Administrative salaries } & 30,100 \\\hline\end{array}$$
How much was Webster's manufacturing overhead?

• A) $22,240
• B) $62,270
• C) $21,400
• D) $25,240

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Definitions:

Contribution Format Income Statement

An income statement format that separates fixed costs from variable costs and is used to calculate the contribution margin.

Unit Sales

The quantity of products sold by a company, not accounting for any bulk, wholesale, or grouping discounts.

Margin of Safety

The difference between actual sales and the break-even point, indicating the amount by which sales can drop before a business incurs a loss.

Degree of Operating Leverage

Degree of operating leverage measures the sensitivity of a company's operating income to a change in sales volume, indicating the impact on profits from sales fluctuations.