Max Company Manufactures Two Models of Pens, a Standard and a Deluxe

question 46

Multiple Choice

Max Company manufactures two models of pens, a standard and a deluxe model.Three activities have been identified as cost drivers and the related overhead costs $70,000) pooled together to arrive at the following information: $\begin{array}{cccc} & \begin{array}{c}\text { Number } \\\text { of }\end{array} & \begin{array}{c}\text { Number } \\\text { of }\end{array} & \begin{array}{c}\text { Number } \\\text { of }\end{array} \\\text { Product } & \text { Setups } & \text { Components } & \text { DLH }\\\hline\text { Standard } & 20 & 15 & 375 \\\text { Deluxe } & 30 & 45 & 225 \\& & & \\\text { Costs per pool } & \$ 50,000 & \$ 9,000 & \$ 36,000\end{array}$ If activity?based costing is used, _____ is the overhead rate per setup.

• A)$1,000
• B)$150
• C)$60
• D)$117

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Definitions:

Permanent/Temporary

Categories of accounts in accounting, where permanent accounts carry their end-of-period balances into the next period, and temporary accounts are closed.

Deposits In Transit

Deposits that were made by customers of a bank but did not reach, or were not processed by, the bank before the preparation of the bank statement.

Bank Collections

The process of banks acting as intermediaries to collect and process payments, such as checks or drafts, on behalf of clients.

Credit Memorandum

A document issued by a seller to acknowledge a reduction in the amount that a buyer owes, often due to a return or refund.