Reference no: EM132872299

Questions -

Q1. XYZ company ran 1,500 machine hours at the end of the year. The pre-determined overhead rate was calculated at the beginning of the year to be $250 per machine hour and actual overhead was $400,000, by how much was overhead over-or-under applied?

A. Under applied by $15,000

B. Under applied by $25,000

C. Over applied by $25,000

D. Over applied by $15,000

Q2. At the end of the period, if overhead has been overapplied by a small amount, how is it adjusted?

A. Increase COGS

B. Increase COGS, WIP & Finished Goods Inventory by a pro-rata amount

C. Decrease COGS, WIP & Finished Goods Inventory by a pro-rata amount

D. Decrease COGS

Q3. Mambo Company is considering a new machine for its production plant to replace an old machine that originally cost $14,000 and has $11,000 of accumulated depreciation. The new machine can be purchased at a cash cost of $20,000, but the distributor of the new machine has offered to take the old machine in as a trade-in, thereby reducing the cost of the new machine to $18,000. Based only on this information, calculate the total relevant cost of acquiring the new machine.

A. $19,000, or the gross cost of the new machine minus the $1,000 loss on disposing of the old machine.

B. $18,000, or the net cash paid to the distributor

C. $21,000, or the net cash paid plus the book value ($3,000) of the old machine

D. $20,000, or the gross cost of the new machine