The Management of Keeter Corporation Would Like to Investigate the Possibility

question 16

Multiple Choice

The management of Keeter 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 89,000 machine-hours. In addition, capacity is 96,000 machine-hours and the actual level of activity for the year is 88,600 machine-hours. All of the manufacturing overhead is fixed and is $7,176,960 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)$74.76
• B)$81.00
• C)$80.64
• D)$79.66

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Definitions:

Do Your Best Goal

A personal objective focused on exerting maximum effort and achieving the highest level of performance possible.

Participation

The act of taking part or becoming involved in activities or discussions within a group or organization.

Goal Setting

The process of identifying specific, measurable, and time-targeted objectives to be achieved.

Specific, High

This term lacks context but in goal-setting theory, "specific, high" goals refer to well-defined and challenging objectives that enhance motivation and performance.