(Appendix 4B)The Management of Wray Corporation Would Like to Investigate

question 13

Multiple Choice

(Appendix 4B) The management of Wray Corporation would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity.The company's controller has provided an example to illustrate how this new system would work.In this example, the allocation base is machine-hours and the estimated amount of the allocation base for the upcoming year is 68, 000 machine-hours.In addition, capacity is 79, 000 machine-hours and the actual level of activity for the year is 63, 500 machine-hours.All of the manufacturing overhead is fixed and is $3, 384, 360 per year.For simplicity, it is assumed that this is the estimated manufacturing overhead for the year as well as the manufacturing overhead at capacity.It is further assumed that this is also the actual amount of manufacturing overhead for the year. If the company bases its predetermined overhead rate on capacity, the predetermined overhead rate is closest to:

• A)$53.30
• B)$49.77
• C)$42.84
• D)$47.27

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Definitions:

Lateral Hypothalamus

A region in the brain known as the hunger center; it plays a significant role in promoting feeding and drinking behavior.

Overeating

The consumption of food in quantities greater than the body's energy requirements, often leading to weight gain and potential health issues.

Undereating

The consumption of insufficient food, which can lead to nutritional deficiencies and health problems.

Obesity

A medical condition involving an excessive amount of body fat, increasing the risk of health problems.