The Management of Wymer Corporation Would Like to Investigate the Possibility

question 23

Multiple Choice

The management of Wymer 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 50,000 machine-hours. In addition, capacity is 59,000 machine-hours and the actual level of activity for the year is 53,300 machine-hours. All of the manufacturing overhead is fixed and is $1,622,500 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 J44V. This job required 230 machine-hours.
-If the company bases its predetermined overhead rate on capacity, the predetermined overhead rate is closest to:

• A) $32.45
• B) $27.50
• C) $30.44
• D) $30.38

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Definitions:

Self-Actualization

The achievement or actualization of personal talents and potential, often regarded as a universal motivation or necessity within every individual.

Maslow

Refers to Abraham Maslow, a psychologist known for creating Maslow's hierarchy of needs, a theory of psychological health predicated on fulfilling innate human needs.

Physiological Need

Basic physical requirements necessary for human survival, such as food, water, and sleep, which must be met to ensure health and well-being.

Unpredictability

The quality of being unable to be foreseen or declared in advance.