The Following Information Is Available for the Downtown Furniture Company

question 1

Multiple Choice

The following information is available for the Downtown Furniture Company which produces two types of tables. Management feels that the fixed manufacturing costs should be allocated based on direct labor costs and fixed administrative costs should be allocated based on units sold. The amount of fixed administrative costs which should be allocated to the Cherry tables is:

• A) $15,500
• B) $18,600
• C) $31,000
• D) $11,625

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Definitions:

Economies of Scale

Cost advantages a business obtains due to expansion, characteristically causing a decrease in fixed costs per unit of production.

Conglomerate Mergers

Conglomerate mergers involve companies from unrelated business activities or industries merging, often to diversify business operations and risk.

Market Share

The portion of a market controlled by a particular company or product.

Financial Results

The summary outcomes of a company's operations and activities, often presented in terms of income, revenue, profit, and loss.