# Gilchrist Corporation bases its predetermined overhead rate on the estimated machine-hours for the upcoming year. At the beginning of the most recently completed year, the Corporation estimated the machine-hours for the upcoming year at 35,900 machine-hours. The estimated variable manufacturing overhead was \$4.80 per machine-hour and the estimated total fixed manufacturing overhead was \$945,606. The predetermined overhead rate for the recently completed year was closest to:

Predetermined manufacturing overhead rate= \$31.14 per machine-hour

Explanation:

Giving the following information:

Estimated machine-hour= 35,900 machine-hours

Estimated variable overhead= \$4.80 per machine-hour

Total fixed manufacturing overhead was \$945,606.

To calculate the predetermined manufacturing overhead rate we need to use the following formula:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= (945,606/35,900) + 4.8

Predetermined manufacturing overhead rate= \$31.14 per machine-hour

## Related Questions

A project will not produce any cash flows for two years. Starting in the third year, it will produce annual cash flows of \$11,900 a year for two years. The project initially costs \$43,600. In Year 6, the project will be closed and as a result should produce a final cash inflow of \$50,500. What is the net present value of this project if the required rate of return is 8.7 percent?

The NPV of the project at 8.7 percent will be  4,802.58‬

Explanation:

We will calcualte the present value of the cash inflow:

year 3:

Inflow     11,900.00

time          3.00

rate          0.087

PV    9,265.28

Year 4:

Inflow      11,900.00

time           4.00

rate           0.087

PV   8,523.71

Year 6:

Inflow      50,500.00

time   6.00

rate  0.087

PV   30,613.58

Then, we will add them together and subtract the investment amount

NPV: 30,613.59 + 8,523.71 + 9,265.28 - 43,600 = 4,802.58‬

To achieve the social optimum,the government could set a tax equal to ________ per unit sold. A) \$6
B) \$4
C) \$2
D) \$3
E) \$5

A) \$6

Explanation:

The equilibrium price arises when the marginal cost of private i.e. demand is \$12 and when the social production cost is to be considered then the equilibrium price is \$18

So, to accomplish the social optimum, the government should set a tax of

= \$18 - \$12

= \$6

This shifted the private marginal cost to the left and there is yield to the social optimum

Hence, the correct option is A. \$6

Which of the following statements about financial statement analysis is most correct? a. The current ratio is the best available measure of liquidity.

b. Du Pont analysis is based on the fact that return on equity (ROE) can be expressed as the sum of four other ratios.

c. It is relatively easy to interpret a ratio in the absence of comparative data.

d. There are no limitations to financial statement analysis, so analysts can always be confident of their conclusions.

e. None of the above statements is correct.

The answer is e) None of the above statements is correct.

Explanation:

The current ratio, which measures the coverage of current assets against current liabilities, though used widely faces the limitation that it does not adequately reflect how well a company pays-off its short term debt. In simple terms, a high current ratio indicating how well a company pays short term debt is not forcefully appreciated in a given economic condition. as it is affected by elements such as time for collectinig bills. This is why to move in line with the going-concern principle, the acid test ratio is the best available measure of liquidity.

Du pont analysis is a form of financial ratio tools that comprises of 3 other financial ratios to provide better comprehension of the Return on Equity of a company. That is Net Profit Margin, Asset Turnover and Totat assets to Total equity ratios.

Interpretation of financial ratios requires the use of data so as to provide a comparison and determine the changes in the financial position of a company.

There are existing limitations to financial statement analysis such as the effect of inflation, the fact that data used for comparison is based on past information and it becomes to hard to predict the future. Considering these, analysts should rather be careful when communicating financial information.

The correct answer is 'b' - Du Pont's analysis is based on a relationship between ROE and three other ratios, not four. The statement 'a' isn't entirely true as the current ratio ignores the type and quality of current assets. Statements 'c' and 'd' are incorrect as analyzing a ratio without comparative data is misleading and limitations exist in financial statement analysis.

### Explanation:

The correct statement about financial statement analysis is option 'b. Du Pont's analysis is based on the fact that return on equity (ROE) can be expressed as the product of three other ratios: the net profit margin, the total assets turnover, and the financial leverage ratio, not four. It's crucial to note that, while the current ratio can provide insight into a company's liquidity, it's not universally 'the best' measure because it fails to account for the nature and quality of current assets. Statements 'c' and 'd' are also incorrect; interpreting ratio data without comparative data lacks context and can be misleading, and financial statement analysis does have limitations such as not considering non-financial factors or possible manipulation of financial statements.

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Sammy and Monica, both age 67, incur and pay medical expenses in excess of insurance reimbursements during the year as follows: For Sammy \$16,000
For Monica (spouse) 4,000
For Chuck (son) 2,500
For Carter (Monica’s father) 5,000
Sammy and Monica’s 2019 AGI is \$130,000. They file a joint return. Chuck and Carter are Sammy and Monica’s dependents.
What is Sammy and Monica’s medical expense deduction for regular income tax purposes?

The Sammy and Monica’s medical expense deduction for regular income tax purposes is \$17,750.

Explanation:

For the purpose of regular income tax, the deduction pertaining to medical expenses are available up to the extent it exceeds 10% of AGI.

Deduction available = excess expenses incurred - 7.5% of AGI

= (\$16,000  + 4,000  + 2,500+5,000) - 7.5%*130000

= 27500 - 9.750

= \$17,750

Therefore, The Sammy and Monica’s medical expense deduction for regular income tax purposes is \$17,750.

Royal Enterprises has presented the following information for the past three months operations: Month Units Average Cost
June 3,300 \$ 11.80
July 5,700 \$ 7.80
August 6,900 \$ 7.00
a. Using the high-low method, calculate the fixed cost per month and variable cost per unit. (Round your variable cost to 2 decimal places.)
b. What would total costs be for a month with 5,300 units produced?

Instructions are below.

Explanation:

Giving the following information:

Month Units Average Cost

June 3,300 \$ 11.80=38,940

July 5,700 \$ 7.80 = 44,460

August 6,900 \$ 7.00 = 48,300

To calculate the unitary variable cost and fixed costs under the high-low method, we need to use the following formulas:

Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)

Variable cost per unit= (48,300 - 38,940) / (6,900 - 3,300)

Variable cost per unit=  \$2.6

Fixed costs= Highest activity cost - (Variable cost per unit * HAU)

Fixed costs= 48,300 - (2.6*6,900)

Fixed costs= \$30,360

Fixed costs= LAC - (Variable cost per unit* LAU)

Fixed costs= 38,940 - (2.6*3,300)

Fixed costs= \$30,360

Now, the total cost for 5,300 units:

Total cost= 30,360 + 2.6*5,300

Total cost= \$44,140

Assuming the cost of direct materials used is \$1,500,000, compute the total manufacturing costs using the information below. Raw materials inventory, January1 \$ 30,000 Raw materials inventory, December 31 60,000 Work in process, January 1 27,000 Work in process, December 31 18,000 Finished goods, January 1 60,000 Finished goods, December 31 48,000 Raw materials purchases 1,500,000 Direct labor 690,000 Factory utilities 225,000 Indirect labor 75,000 Factory depreciation 500,000 Operating expenses 630,000.

\$2,960,000

Explanation:

Raw Material Used in production:

= Raw Material Inventory Beginning + Purchases of Raw Material - Raw Material Inventory Ending

= \$30,000 + \$1,500,000 - \$60,000

= \$1,470,000

Total Manufacturing Cost:

= Raw Material Used in production + Direct Labor + Manufacturing Overhead applied to Work in process

= \$1,470,000 + \$690,000 + (225,000 + 75,000 + 500,000)

= \$1,470,000 + \$690,000 + \$800,000

= \$2,960,000