1.) A company estimates that overhead costs for the next year will be $8,420,000
ID: 2459048 • Letter: 1
Question
1.)
A company estimates that overhead costs for the next year will be $8,420,000 for indirect labor and $160,500 for factory utilities. The company uses machine hours as its overhead allocation base. If 450,000 machine hours are planned for this next year, what is the company's plantwide overhead rate? (Round to two decimal places)
A.)$0.05 per machine hour.
B.)$19.07 per machine hour.
C.)$18.71 per machine hour.
D.)$0.36 per machine hour.
E.)$2.80 per machine hour.
2.)
Peterson Company estimates that overhead costs for the next year will be $3,600,000 for indirect labor and $820,000 for factory utilities. The company uses machine hours as its overhead allocation base. If 130,000 machine hours are planned for this next year, what is the company's plantwide overhead rate?
A.)$0.03611 per machine hour.
B.)$34.00 per machine hour.
C.)$27.14 per machine hour.
D.)$6.3077 per machine hour.
E.)$0.1585 per machine hour.
3.)
Maroon Company's contribution margin ratio is 41%. Total fixed costs are $178,350. What is Maroon’s break-even point in sales dollars?
A.)$183,526.
B.)$73,124.
C.)$251,474.
D.)$178,350.
E.)$435,000.
4.)
A company manufactures and sells a product for $111 per unit. The company's fixed costs are $59,760, and its variable costs are $81 per unit. The company's break-even point in units is:
A.)1,992.
B.)538.
C.)738.
D.)311.
E.)750.
5.)
Watson Company has monthly fixed costs of $80,000 and a 50% contribution margin ratio. If the company has set a target monthly income of $14,700, what dollar amount of sales must be made to produce the target income?
A.)$189,400
B.)$94,700
C.)$160,000
D.)$29,400
E.)$130,600
A company estimates that overhead costs for the next year will be $8,420,000 for indirect labor and $160,500 for factory utilities. The company uses machine hours as its overhead allocation base. If 450,000 machine hours are planned for this next year, what is the company's plantwide overhead rate? (Round to two decimal places)
Explanation / Answer
1)Plant Over head rate per machine hour=($ 8,420,000 + $ 160,500)/450,000 machine hours
=$ 19.07 per machine hour
Hence Option B is correct
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2) 1)Plant Over head rate per machine hour=($ 3,600,000+ $ 820,000)/ 130,000 machine hours
=$34.00 per machine hour
Hence Option B is correct
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3) break-even point in sales dollars= fixed cost/ contribution margin ratio
= $178,350/41%= $435,000.
Hence Option E is correct
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4) Break-even point in units= fixed cost/ contribution per unit= fixed cost/ (sales-variable cost)
=$59,760/$ 111- $81
=$59,760/$ 30
=1,992 units
Hence Option A is correct
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5)Target sales=(Fixed Cost+ Desired Profit)/ contribution margin ratio
= ($80,000+ $14,700)/50%
= 94,700/50%=$ 189,400
Hence Option A is correct
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