Figure 14_03
Use the Following Information for Acme, Inc -What Is the Correct Amount of Overhead?
A) $192,000

question 177

Multiple Choice

Figure 14_03
Use the following information for Acme, Inc., as of December 31
$$\begin{array} { l r } \text { Administrative salaries } & \$ 32,000 \\\text { Depreciation of factory equipment } & 25,000 \\\text { Depreciation of delivery vehicles } & 9,000 \\\text { Direct labor } & 68,000 \\\text { Factory supplies used } & 12,000 \\\text { Finished goods inventory, January 1 } & 57,000 \\\text { Finished goods inventory, December } 31 & 68,000 \\\text { Factory insurance } & 15,500 \\\text { Interest expense } & 12,000 \\\text { Factory utilities } & 14,000 \\\text { Factory maintenance } & 7,500 \\\text { Raw materials inventory, January 1 } & 8,000 \\\text { Raw materials inventory, December 31 } & 4,000 \\\text { Raw material purchases } & 125,000 \\\text { Rent on factory building } & 25,000 \\\text { Repairs of factory equipment } & 11,500 \\\text { Sales commissions } & 37,500 \\\text { Goods in process inventory, January } 1 & 3,500 \\\text { Goods in process inventory, December } 31 & 2,000\end{array}$$

-What is the correct amount of overhead?

• A) $192,000.
• B) $110,500.
• C) $200,000.
• D) $150,000.
• E) $ 77,500.

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Definitions:

Sinking Fund Clause

A provision in a bond contract that requires the issuer to periodically set aside funds to retire a portion of the debt before it matures.

Inflation-Indexed Treasury Securities

Government bonds that are adjusted for inflation to protect investors from the decline in purchasing power.

TIPS

Treasury Inflation-Protected Securities, a type of U.S. government bond designed to help protect investors from inflation, as the principal value adjusts with inflation.

PIKs

Short for "Payment in Kind," a type of financing or loan where the borrower can pay interest or dividends with additional securities instead of cash.