Use the Following Information for Hayes, Inc -What Is the Correct Amount of Overhead Based on the 31

question 75

Multiple Choice

Use the following information for Hayes, Inc., as of December 31 to answer the next questions:
$\begin{array}{lr}\text { Administrative salaries } & \$ 32,000 \\\text { Depreciation of factory equipment } & 25,000 \\\text { Depreciation of delivery vehicles } & 8,000 \\\text { Direct labor } & 68,000 \\\text { Factory supplies used } & 12,000 \\\text { Finished goods inventory, January 1 } & 57,000 \\\text { Finished goods inventory, December 31 } & 68,000 \\\text { Factory insurance } & 15,500\\\text { Interest expense } & 12,000 \\\text { Factory utilities } & 14,000 \\\text { Factory maintenance } & 7,500 \\\text { Raw materials inventory, January 1 } & 8,000 \\\text { Raw materials inventory, December 31 } & 4,000 \\\text { Raw material purchases } & 125,000 \\\text { Rent on factory building } & 25,000 \\\text { Repairs of factory equipment } & 11,500 \\\text { Sales commissions } & 37,500 \\\text { Goods in process inventory, January 1 } & 3,500 \\\text { Goods in process inventory, December 31 } & 2,000\end{array}$
-What is the correct amount of overhead based on the Hayes Inc. information?

• A) $192,000.
• B) $110,500.
• C) $200,000.
• D) $150,000.
• E) $77,500.

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Definitions:

External Benefit

A benefit that results from an economic activity which accrues to unrelated third parties.

Third Party

An entity involved in a transaction or agreement who is not one of the principal parties.

Cooperative

An organization consisting of people who pool their resources to buy and sell more efficiently than they could individually.

Single-Owner

Pertains to a business that is exclusively owned by one individual who is responsible for its operations and liabilities.