Ultimo Co Operates Three Production Departments as Profit Centers

question 71

Multiple Choice

Ultimo Co. operates three production departments as profit centers. The following information is available for its most recent year. Department 2's contribution to overhead in dollars is:

• A) $210,000.
• B) $350,000.
• C) $10,000.
• D) $260,000.
• E) $150,000.

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Definitions:

Machine-hour

A metric that quantifies the number of hours a machine is utilized to manufacture products during a specified timeframe.

High-low Method

An approach in managerial accounting that approximates variable and fixed costs by examining the maximum and minimum levels of activity.

Inspection Costs

Expenses associated with the activity of checking and verifying the quality or specifications of goods or services.

Direct Labor-hour

A measure of the amount of time spent by workers directly involved in the production process to manufacture a product.