The XYZ Manufacturing Company Has Two Support Activity Pools, Accounting

question 37

Multiple Choice

The XYZ Manufacturing Company has two support activity pools, Accounting and Human Resources. Costs for each are $380,000 and $190,000 respectively. 10% of the Human Resource costs are consumed by Accounting and 15% of the Accounting costs are consumed by Human Resources. The company uses the reciprocal method of allocating support costs. The total costs for the Human Resources department which will be allocated to line activities and cost objects will be:

• A)$250,761
• B) $252,208
• C) $247,000
• D) $249,850

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Definitions:

Barriers to Entry

Factors that make it difficult for new firms to enter a market, such as high startup costs, regulatory requirements, and established competitors.

Market Power

The ability of a firm to influence or control the price and quantity of goods or services in a market.

Marginal Revenue

The additional income obtained from selling one more unit of a product or service.

Demand Schedule

A table that shows the quantity of a good or service that consumers wish to buy at each price level.