Assume Porter's Consulting Uses the Number of Purchase Orders as the Cost

question 22

Multiple Choice

Assume Porter's Consulting uses the number of purchase orders as the cost driver for allocating purchasing costs of $285,000.If Porter issues 1,000 purchase orders, including 300 used by line activity one, 400 used by line activity two, 50 for supplies used by purchasing itself, and 250 used by administration, how much of the cost will be allocated to line activity two using the direct method of allocation?

• A)$199,500
• B)$114,000
• C)$162,857
• D)$195,000
• E)None of the above.

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Definitions:

Assertion

A confident and forceful statement of fact or belief, presenting one's stance or viewpoint unequivocally.

Assumption

A thing that is accepted as true or as certain to happen, without proof.

Reason

The power of the mind to think, understand, and form judgments by a process of logic.

Reason

The power of the mind to think, understand, and form judgments logically or the cause that explains a person's actions or events.