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presently producing Part Y internally at a total cost of $100,000 as
follows.
Direct materials............................................... $20,000
Direct labor...................................................... 40,000
Variable manufacturing overhead...................... 16,000
Fixed manufacturing overhead.......................
24,000
Total costs.......................................................100,000
An outside supplier has offered to provide Part Y at a price of $10 per
unit. If Lindon stops producing the part internally, one third of the fixed
manufacturing overhead would be eliminated.
11. (TCO B) Wahr Corporation bases its predetermined overhead rate on
the estimated labor hours for the upcoming year. At the beginning of the
most recently completed year, the company estimated the labor hours for
the upcoming year at 35,000. The estimated variable manufacturing
overhead was $7.25 per labor hour and the estimated total fixed
manufacturing overhead was $585,000. The actual labor hours for the
year turned out to be 33,000.
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ACCT 505 Final Exam Guide (New) Set 1
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Score 248/250
Multiple Choice 2
Short 2
Essay 7