Inuvik Company Manufactures Drill Presses

question 41

Essay

Inuvik Company manufactures drill presses.Based on past experience,Inuvik has found that its total overhead cost can be represented by the following formula: total overhead cost = $40,000 + $1.25x,where x = number of machine hours.Last year,Inuvik incurred 150,000 machine hours.
Required: A. What was the total overhead cost incurred by Inuvik last year?
B. What was the total variable overhead cost incurred by Inuvik last year?
C. What was the total overhead cost per machine hour last year?
D. What was the fixed overhead cost per machine hour last year?
E. If Inuvik incurs 180,000 machine hours next year, what will be the total overhead cost per machine hour?

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Definitions:

Cash-Out Combinations

Financial strategies or transactions where owners of a business sell their stake in the company, partially or entirely, for cash.

Fair Dealing

A legal doctrine requiring parties to engage in business transactions in a just, equitable, and non-discriminatory manner.

Minority Shareholders

Shareholders who own a smaller portion of a company's shares, compared to majority shareholders, and often have limited influence on company decisions.

Limited Duration

Describes contracts, agreements, or conditions that are effective for a specific, finite period of time.