The Following Data Pertains to Activity and Utility Costs for Two

question 59

Multiple Choice

The following data pertains to activity and utility costs for two recent years:
Using the high-low method, the cost formula for utilities is:

• A) $1.50 per unit
• B) $8,000 plus $0.50 per unit
• C) $1.25 per unit
• D) $6,000 plus $0.75 per unit

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Definitions:

Schedule Of Cost Of Goods Manufactured

A schedule that contains three elements of product costs—direct materials, direct labor, and manufacturing overhead—and that summarizes the portions of those costs that remain in ending Work in Process inventory and that are transferred out of Work in Process into Finished Goods.

Direct Materials Cost

The cost of raw materials that are directly traceable to the production of a specific product or service.

Manufacturing Overhead

All manufacturing costs other than those accounted for as direct labor and direct materials. Includes indirect costs such as maintenance, utilities, and rent in the production process.

Indirect Materials

Materials used in the production process that cannot be directly linked to specific products, such as lubricants and cleaning supplies.