The Covey Corporation Is Preparing Its Manufacturing Overhead Budget for the Fourth

question 91

Multiple Choice

The Covey Corporation is preparing its Manufacturing Overhead Budget for the fourth quarter of the year. The budgeted variable manufacturing overhead rate is $4.00 per direct labor-hour; the budgeted fixed manufacturing overhead is $64,000 per month, of which $18,000 is factory depreciation. If the budgeted cash disbursements for manufacturing overhead for November are $90,000, then the budgeted direct labor-hours for November must be:

• A)11,000 direct labor-hours
• B)22,500 direct labor-hours
• C)6,500 direct labor-hours
• D)2,000 direct labor-hours

Differentiate between states of nature, decision alternatives, and outcomes in decision-making models.

Identify and construct payoff and opportunity loss tables.

Calculate optimum decisions using EMV and EOL criteria.

Interpret the significance of negative values in opportunity loss tables.

---

Definitions:

Indirect Salaries

Salaries for employees who do not directly work on the production of products or services but support those who do.

Basis of Sales

The underlying foundation or principle for recognizing revenue from sales transactions in accounting records.

Departmental Accounting System

This system allows for accounting and financial reporting to be done separately by departments within an organization, facilitating more specific financial oversight.

Cost Center

A department or function within an organization where its costs are accumulated, but it does not directly generate revenue.