Pohl Corporation Uses a Standard Cost System in Which Manufacturing

question 107

Multiple Choice

Pohl Corporation uses a standard cost system in which manufacturing overhead is applied on the basis of standard machine-hours. For June, the company's manufacturing overhead flexible budget showed the following total budgeted costs at a denominator activity level of 20,000 machine-hours: During June, 17,000 machine-hours were used to complete 13,000 units of product, and the following actual total overhead costs were incurred: At standard, each unit of finished product requires 1.4 hours of machine time. The total predetermined overhead rate per machine-hour for June was:

• A)$2.57 per machine-hour
• B)$1.30 per machine-hour
• C)$2.80 per machine-hour
• D)$3.15 per machine-hour

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Definitions:

Preferred Dividends

The dividends that are allocated and paid to preferred shareholders before any dividends can be distributed to common shareholders.

Retained Earnings

The portion of net income not distributed as dividends to shareholders, but instead reinvested in the company or kept as reserve.

Plant & Equipment, Net

The net book value of physical assets used in operations, after accounting for depreciation and disposals.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or the normal operating cycle of the business, whichever is longer.