The Ramapo Company Produces Two Products, Blinks and Dinks

question 89

Multiple Choice

The Ramapo Company produces two products, Blinks and Dinks. They are manufactured in two departments, Fabrication and Assembly. Data for the products and departments are listed below. All of the machine hours take place in the Fabrication department, which has an estimated overhead of $84,000. All of the labor hours take place in the Assembly department, which has an estimated total overhead of $72,000.
The Ramapo Company uses a single overhead rate to apply all overhead costs. What would the single plantwide rate be if it was based on machine hours instead of labor hours?

• A) $9.00 per MH
• B) $19.50 per MH
• C) $7.43 per MH
• D) $4.00 per MH

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Definitions:

Natural Resources

Resources present in nature, like minerals, forests, water, and fertile lands, that can be tapped for making money.

Absolute Advantage

The ability of a country or individual to produce a good or service more efficiently than other countries or individuals, using fewer resources.

Production Possibilities Frontiers

A curve depicting the maximum output combinations of two goods that can be produced given the resources and technology.

Opportunity Cost

The value of the best alternative that must be forgone when making a choice.