Multiple Choice
Fixed manufacturing overhead costs remain constant at $400,000 per month and are allocated based on a monthly professional labor-hour allocation rate.Professional labor hours are estimated at 12,000 for high-output months and 3,000 for low-output months.The final customer price includes a markup of 50% of cost.As a result:
A) low-output months will allocate less manufacturing overhead costs to each job.
B) low-output months will deter customers due to the higher prices.
C) the high-output months present a more accurate method of pricing.
D) an annual allocation rate would result in lower prices during the high-output months than the monthly allocation rate.
Correct Answer:
Verified
Correct Answer:
Verified
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