The Murray Corporation Makes and Sells a Single Product

question 81

Multiple Choice

The Murray Corporation makes and sells a single product.The company recorded the following activity and cost data for May: The fixed component of the predetermined overhead rate is $0.95 per direct labor-hour. The fixed manufacturing overhead used to calculate the predetermined overhead rate was:

• A)$64,125
• B)$67,500
• C)$68,400
• D)$70,275

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Definitions:

Undercapitalized

A condition where a company does not have sufficient capital to conduct normal business operations effectively.

Accounts Payable

The amount of money a company owes to its suppliers or creditors for goods and services purchased on credit.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency of the business.

Cost of Trade Credit

The effective interest rate associated with taking discounts offered by suppliers for early payment or the cost of forgoing those discounts.