Hails Corporation Manufactures Two Products: Product Q21F and Product H44W

question 26

Multiple Choice

Hails Corporation manufactures two products: Product Q21F and Product H44W. The company uses a plantwide overhead rate based on direct labor-hours. It is considering implementing an activity-based costing (ABC) system that allocates its manufacturing overhead to four cost pools. The following additional information is available for the company as a whole and for Products Q21F and H44W. Using the ABC system, the percentage of the total overhead cost that is assigned to Product Q21F is closest to:

• A) 26.71%
• B) 50.00%
• C) 34.18%
• D) 60.89%

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Definitions:

FIFO Method

"First In, First Out," an inventory valuation method where the oldest inventory items are recorded as sold first.

Weighted Average Method

A computation that considers the different levels of significance of the numbers within a dataset.

Work in Progress

Inventory representing partially completed goods which require further work before they are ready for sale.

Equivalent Units

A metric used in cost accounting to express the work done on partially finished goods as an equivalent number of fully completed units.