Figure 4-1 the Foremost Company Predicted Factory Overhead for 2013

question 39

Multiple Choice

Figure 4-1 The Foremost Company predicted factory overhead for 2013 and 2014 would be $120,000 for each year. The predicted activity for 2013 and 2014 were 30,000 and 20,000 direct labor hours, respectively. Additional data are as follows:
The company assumes that the long-run normal production level is 20,000 direct labor hours per year. The actual factory overhead cost for the end of 2013 and 2014 was $120,000. Assume that it takes one direct labor hour to make one finished unit.
Refer to Figure 4-1. When the normal factory overhead rate is used, the gross profits for 2013 and 2014, respectively, are

• A) $80,000 and $80,000.
• B) $200,000 and $200,000.
• C) $120,000 and $140,000.
• D) $100,000 and $100,000.

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