The Following Information Pertains to Utter Company

question 100

Multiple Choice

The following information pertains to Utter Company:

Utter Company does not divide costs into fixed and variable components.Personnel costs are allocated based on the number of employees, and maintenance costs are allocated based on machine hours.

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Predetermined overhead rates for fabrication and assembly are based on direct labor hours.(Round amounts to dollars.)
If the direct method is used to allocate support department costs, the predetermined overhead rate for the Fabrication Department (rounded to two decimal places) would be

• A) $28.80.
• B) $5.40.
• C) $7.28.
• D) $24.78.

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Definitions:

Adjustments

Changes made to preliminary financial statement figures to correct errors, account for prepayments, accruals, or to reflect a more accurate representation of the financial position.

Acquisition Method

An accounting technique used in consolidating the financial statements of a group in which a new acquisition is included.

Business Combinations

Transactions in which one entity gains control over one or more other businesses, including mergers, purchases of net assets, and consolidations.

AASB 3

Refers to the Australian Accounting Standards Board standard that outlines the requirements for the accounting of business combinations, including the recognition and measurement of assets, liabilities, non-controlling interest, and goodwill.