Oldham Corporation Bases Its Predetermined Overhead Rate on Variable Manufacturing

question 105

Multiple Choice

Oldham Corporation bases its predetermined overhead rate on variable manufacturing overhead cost of $4.00 per machine-hour and fixed manufacturing overhead cost of $87,822 per period. If the denominator level of activity is 4,100 machine-hours, the fixed component in the predetermined overhead rate would be:

• A)$25.42
• B)$4.00
• C)$21.42
• D)$400.00

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Definitions:

Peak Efficiency

The highest level of performance or effectiveness that a process, machine, or organization can achieve.

ATC (Average Total Cost)

The per unit cost of production, calculated by dividing the total cost by the quantity of output produced.

MC (Marginal Cost)

The additional expense associated with the production of one more unit of a product or service.

Take a Loss

To realize a financial loss on an investment or transaction, often as a result of selling assets for less than their purchase price.