Use the Information Below to Answer the Following Question(s)

question 160

Multiple Choice

Use the information below to answer the following question(s) :
Durable Engines Company uses ABC to account for it manufacturing process.

Durable Engines Company expects to produce 2,000 engines. Durable Engines Company also expects to use 12,000 parts and have 16 setups.
-The allocation rate for machine setups is

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Definitions:

Pretax Income

The income a company generates before income taxes are deducted, also known as earnings before tax (EBT).

Variable Costing

An accounting method that only allocates variable costs to production, treating fixed costs as period costs that are charged to expense as they are incurred.

Fixed Overhead Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance, and must be paid regardless of the business activity level.

Product Costs

Costs that are directly associated with the production of goods or services.