The management of a company would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The company's controller has provided an example to illustrate how this new system would work, using machine-hours as the allocation base. Actual Machine Hours Manufacturing Overhead Estimated 50,000 $1,855,000 Сарacity 53,000 $1,855,000 52,000 $1,855,000 If the company bases its predetermined overhead rate on capacity, then how much would they show as the cost of unused capacity on their income statement? (Do not add a comma in a number, e.g., write 1000 for one thousand.) Cost of unused capacity = $
The management of a company would like to investigate the possibility of basing its predetermined overhead rate on activity at capacity. The company's controller has provided an example to illustrate how this new system would work, using machine-hours as the allocation base. Actual Machine Hours Manufacturing Overhead Estimated 50,000 $1,855,000 Сарacity 53,000 $1,855,000 52,000 $1,855,000 If the company bases its predetermined overhead rate on capacity, then how much would they show as the cost of unused capacity on their income statement? (Do not add a comma in a number, e.g., write 1000 for one thousand.) Cost of unused capacity = $
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The management of a company would like to investigate the possibility of basing its predetermined overhead rate on activity at
capacity. The company's controller has provided an example to illustrate how this new system would work, using machine-hours as the
allocation base.
Machine Hours
Manufacturing Overhead
Estimated
50,000
$1,855,000
Capacity
53,000
$1,855,000
Actual
52,000
$1,855,000
If the company bases its predetermined overhead rate on capacity, then how much would they show as the cost of unused capacity on
their income statement? (Do not add a comma in a number, e.g., write 1000 for one thousand.)
Cost of unused capacity = $
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