Management of Modugno Corporation is considering whether to purchase a new model 370 machine costing $443,000 or a new model 240 machine costing $404,000 to replace a machine that was purchased 12 years ago for $411,000. The old machine was used to make product M25A until it broke down last week. Unfortunately, the old machine cannot be repaired.
Management has decided to buy the new model 240 machine. It has less capacity than the new model 370 machine, but its capacity is sufficient to continue making product M25A.
Management also considered, but rejected, the alternative of simply dropping product M25A. If that were done, instead of investing $404,000 in the new machine, the money could be invested in a project that would return a total of $432,000.
In making the decision to buy the model 240 machine rather than the model 370 machine, the sunk cost was:
- $432,000
- $443,000
- $411,000
- $404,000
At the beginning of the year, manufacturing overhead for the year was estimated to be $266,400. At the end of the year, actual direct labor-hours for the year were 22,500 hours, the actual manufacturing overhead for the year was $264,300, and manufacturing overhead for the year was overapplied by $5,700. If the predetermined overhead rate is based on direct labor-hours, then the estimated direct labor-hours at the beginning of the year used in the predetermined overhead rate must have been: (Round your intermediate calculations to 2 decimal places.)
- 22,200 direct labor-hours
- 20,700 direct labor-hours
- 21,800 direct labor-hours
- 22,500 direct labor-hours
Hults Corporation has provided data concerning the company's Manufacturing Overhead account for the month of November. Prior to the closing of the overapplied or underapplied balance to Cost of Goods Sold, the total of the debits to the Manufacturing Overhead account was $68,800 and the total of the credits to the account was $60,800. Which of the following statements is true?
Manufacturing overhead transferred from Finished Goods to Cost of Goods Sold during the month was $68,800.
- Actual manufacturing overhead incurred during the month was $60,800.
- Manufacturing overhead applied to Work in Process for the month was $68,800.
- Manufacturing overhead for the month was underapplied by $8,000.