Michael & Co

question 45

Multiple Choice

Michael & Co. expects overhead costs of $60,000 per month and direct production costs of $24 per unit. The estimated production activity for the 2013 accounting period is as follows: The predetermined overhead rate based on units produced is (rounded to the nearest penny) is:

• A) $1.50 per unit.
• B) $2.67 per unit.
• C) $18.00 per unit.
• D) $42.00 per unit.

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Definitions:

Present Expenditures

Current spending or outflows of money, usually referring to the costs or expenses a business or individual faces at the moment.

MU (Marginal Utility)

The augmented utility or pleasure achieved by consuming an extra unit of a good or service.

Marginal Cost

The outlay required to produce another unit of a product or service.

Marginal Benefit

The additional benefit to a consumer from consuming one more unit of a good or service.