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

question 21

Multiple Choice

(Appendix 4B) The management of Cordona 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 27, 000 machine-hours.In addition, capacity is 33, 000 machine-hours and the actual level of activity for the year is 27, 900 machine-hours.All of the manufacturing overhead is fixed and is $231, 660 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.A number of jobs were worked on during the year, one of which was Job I86N.This job required 370 machine-hours. If the company bases its predetermined overhead rate on capacity, the amount of manufacturing overhead charged to job I86N is closest to:

• A)$3, 072.19
• B)$3, 296.70
• C)$2, 597.40
• D)$3, 234.50

---

Definitions:

Emotional Affect

Refers to the experience of feeling or emotion, which can influence thoughts, behavior, and psychological well-being.

Physics Test

An examination or assessment aimed at evaluating understanding and knowledge of concepts in the field of physics.

Actual Performance

The real, measurable outcomes of an individual's or group's actions, as opposed to expected or perceived performance.

Hippie

A member of a youth movement in the 1960s that rejected conventional societal norms in favor of peace, love, and communal living.