Hale Company Manufactures Two Models of Its Couch, the Mini

question 125

Multiple Choice

Hale Company manufactures two models of its couch, the Mini and the Maxi. The Mini model requires 10,000 direct labor hours and the Maxi model requires 40,000 direct labor hours. The company produces 4,000 units of the Mini model and 1,000 units of the Maxi model each year. The company produces the Mini model in batch sizes of 200, while it produces the Maxi model in batch sizes of 100. The company expects to incur $360,000 of total setup costs this year. How much of the setup costs are allocated to the Mini model using ABC costing?

• A) $240,000
• B) $180,000
• C) $72,000
• D) $300,000

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Definitions:

Point Estimate

A single value or statistic that is used to estimate the value of a population parameter.

Population Proportions

The fraction or percentage of a population that exhibits a specific characteristic or attribute.

Standard Error

The standard deviation of the sampling distribution of a statistic, providing a measure of the precision of the estimated population parameter.

Interval Estimate

An estimate of a population parameter that specifies a range of possible values within which the parameter is expected to lie, often expressed with a level of confidence.