If the Company Bases Its Predetermined Overhead Rate on Capacity

question 28

Multiple Choice

If the company bases its predetermined overhead rate on capacity, the amount of manufacturing overhead charged to the job B04D is closest to:

• A)$1,566.00
• B)$1,551.46
• C)$1,883.91
• D)$1,392.00

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Definitions:

Marginal Cost

The additional expense incurred from producing another unit of a product.

Marginal Revenue

The additional revenue that a company generates from selling one more unit of a good or service.

Average Total Cost

The total cost of production divided by the total number of units produced.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, measuring the opportunity costs of a firm's resources.