The Prattle Corporation Makes and Sells Only One Product Called

question 94

Multiple Choice

The Prattle Corporation makes and sells only one product called a Deb. The company is in the process of preparing its Selling and Administrative Expense Budget for next year. The following budget data are available: All of these expenses (except depreciation) are paid in cash in the month they are incurred. If the company has budgeted to sell 17,000 Debs in January, then the total budgeted variable selling and administrative expenses for January will be:

• A)$34,000
• B)$39,100
• C)$18,700
• D)$25,500

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Definitions:

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead to products, calculated by dividing estimated overhead costs by an allocation base, like direct labor hours or machine hours, before the period begins.

Forming Department

A specific section within a manufacturing process where materials are shaped or formed into parts or products.

Machine-Hour

A unit of measure indicating the operating time of a machine, used in costing to allocate expenses based on machine use.

Overhead Applied

The allocation of indirect costs to specific products or cost objects based on predetermined overhead rates.