Question

22) Reamer Corporation uses a predetermined overhead rate based on machine-hours to apply manufacturing overhead to jobs. The Corporation has provided the following estimated costs for next year:

Direct materials	$	1,000
Direct labor	$	3,000
Sales commissions	$	4,000
Salary of production supervisor	$	2,000
Indirect materials	$	400
Advertising expense	$	800
Rent on factory equipment	$	1,000

Reamer estimates that 500 direct labor-hours and 1,000 machine-hours will be worked during the year. The predetermined overhead rate per hour will be:

A) $6.80 per machine-hour

B) $6.00 per machine-hour

C) $3.00 per machine-hour

D) $3.40 per machine-hour

23) Sivret Corporation uses a job-order costing system with a single plantwide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on the following data:

Total machine-hours	80,000
Total fixed manufacturing overhead cost	$ 624,000
Variable manufacturing overhead per machine-hour	$ 3.10

Recently, Job M598 was completed with the following characteristics:

Number of units in the job	60
Total machine-hours	300
Direct materials	$ 645
Direct labor cost	$ 9,000

The total job cost for Job M598 is closest to:

A) $12,270

B) $9,645

C) $3,915

D) $12,915

24) How would a company attempting to increase market share and profitability employ these concepts? Give an example for a large company and a sole practitioner

Answer 1

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