Chapter 2, Problem 9E

Taveras Corporation is currently operating at 50% of its available manufacturing capacity. It uses a job-order costing system with a plant wide predetermined overhead rate based on machine-hours. At the beginning of the rear, the company made the following estimates:

Required:
1. Compute the plant wide predetermined overhead rate.
2. During the rear, Job P90 was started, completed, and sold to the customer for $2,500. The following information was available with respect to this job:
Cone the total mamlactiú3Z cost assigned to Job P90.

3. Upon comparing Job P90’s sales revenue to its total manufacturing cost, the company’s chief financial officer said if this exact same opportunity walked through our front door tomorrow, I’d turn it down rather than making it and selling it for $2,500.”
a. Construct an argument (supported by numerical analysis) that refutes the chief financial officer’s assertion.
b. Construct an argument (accompanied by numerical analysis) that supports the chief financial officer’s assertions.