Figure 4-1 Adams Company Predicted Factory Overhead for 2010 and 2011

question 87

Multiple Choice

Figure 4-1 Adams Company predicted factory overhead for 2010 and 2011 would be $120,000 for each year.The predicted activity for 2010 and 2011 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 2009 and 2010 was $120,000.Assume that it takes one direct labor hour to make one finished unit.
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Refer to Figure 4-1.When the normal factory overhead rate is used, the gross profits for 2010 and 2011, 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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Definitions:

Repoussé

Repoussé is a metalworking technique in which a malleable metal (such as gold, silver, copper) is ornamented or shaped by hammering from the reverse side to create a design in low relief.

Lost Wax

A method of metal casting in which a molten metal is poured into a mold that has been created by means of a wax model, which melts and runs out, leaving a detailed impression behind.

Carving

A sculptural technique in which the artist cuts away material (for example, from a stone block) in order to create a statue or a relief.

Drilling

The process of creating holes or removing material using a drill bit and a drilling machine, applied in various contexts from manufacturing to construction.