XYZ Co. is using a predetermined overhead rate that was based on estimated total fixed manufacturing overhead of $121,000 and 10,000 direct labor-hours for the period. The company incurred actual total fixed manufacturing overhead of $113,000 and 10,900 total direct labor-hours during the period. The predetermined overhead rate is closest to: Group of answer choices

the predetermined overhead rate is $12.10

Explanation:

The computation of the predetermined overhead rate is shown below:

The Predetermined overhead rate is

= (Estimated total fixed manufacturing overhead ÷ Estimated direct labor hours)

= ($121,000 ÷ 10,000)

= $12.10

hence, the predetermined overhead rate is $12.10

Lindsay purchased the raffle ticket for $5. Now two persons tried to buy her ticket. One person offered her $30 and the other one offered her $65. The person who is offering her $65 is making the best deal for her. If she keeps the raffle ticket, she is actually incurring a cost for keeping the ticket. This cost is called the Opportunity Cost. Opportunity Cost is the cost a person bears by choosing one option out of two or many. So in this question, if Lindsay keeps the raffle ticket, she is incurring an Opportunity Cost of $60. She bought the ticket for $5 and now someone is offering her $65. So after deducting her cost of $5, she is losing $60 as an opportunity cost.