19. A cost that depends on the amount of resource that is used is referred to as

Question

19. A cost that depends on the amount of resource that is used is referred to as a
A) fixed cost.
B) variable cost.
C) direct cost.
D) indirect cost.

Wood Manufacturing is a small textile manufacturer using machine-hours as the single, plant-wide predetermined cost driver rate to allocate manufacturing overhead costs to the various jobs contracted during the year. The following estimates are provided for the coming year for the company and for the Winfield High School band jacket job:

Company Winfield High School Job
Direct materials $40,000 $1,000
Direct labor $10,000 $ 200
Manufacturing overhead costs $30,000
Machine-hours 100,000 900

20. For Wood Manufacturing, what is the annual manufacturing overhead cost driver rate?
A) $0.50 per machine hour
B) $0.80 per machine hour
C) $0.30 per machine hour
D) $33.33 per machine hour

Explanation / Answer

B) variable cost. B) $0.80 per machine hour

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