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

question 84

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 direct labor time for December is 4,000 hours, then the average budgeted manufacturing overhead per direct labor-hour is:

• A)$16.00 per direct labor-hour
• B)$15.50 per direct labor-hour
• C)$20.00 per direct labor-hour
• D)$24.50 per direct labor-hour

Grasp the concept of unused capacity and its implications in ABC.

Appreciate the role of cost pools in ABC and their impact on cost allocation.

Understand how ABC affects decision making regarding product design and profitability.

Learn to apply ABC in different organizational contexts and for various overhead costs.

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Definitions:

Dummy Variables

Variables used in regression analysis to represent categorical data by assigning numerical values, typically 0 or 1, to represent the presence or absence of certain characteristics.

Categorical Variable

A variable that represents groups or categories, which are not numerical.

Regression Equation

An equation that describes the average relationship between a dependent variable and one or more independent variables.

Coefficient Of Determination

A metric quantifying the amount of variation in a dependent variable accounted for by one or more independent variables within a regression model.