The Gardenview Corporation Has Identified the Following Overhead Costs and Activity

question 79

Multiple Choice

The Gardenview Corporation has identified the following overhead costs and activity drivers for next year: $$\begin{array}{l}\begin{array} { c c c c } \text { Overhead Item } & \begin{array} { c } \text { Expected } \\\text { Cost }\end{array} & \text { Activity Driver } & \begin{array} { c } \text { Expected } \\\text { Ouantity }\end{array} \\\hline \text { Setup costs } & \$ 200,000 & \text { Number of setups } & 250 \\\text { Ordering costs } & 80,000 & \text { Number of orders } & 1,600 \\\text { Maintenance } & 400,000 & \text { Machine hours } & 2,000 \\\text { Power } & 40,000 & \text { Kilowatt hours } & 40,000\end{array}\\\\\text { The following are two of the jobs completed during the year: }\\\begin{array} { l c c } & \text { Job 6A } & \text { Job 8B } \\\text { Direct materials } & \$ 3,000 & \$ 4,000 \\\text { Direct labor } & \$ 2,800 & \$ 4,800 \\\text { Units completed } & 100 & 160 \\\text { Direct labor hours } & 50 & 80 \\\text { Number of setups } & 1 & 4 \\\text { Number of orders } & 4 & 5 \\\text { Machine hours } & 20 & 25 \\\text { Kilowatt hours } & 30 & 50\end{array}\end{array}$$
The company's normal activity is 2,000 direct labor hours.
If kilowatt hours are used to assign power costs, the amount of power costs assigned to Job 6A would be

• A)$33.20.
• B)$30.00.
• C)$102.00.
• D)$53.32.

---

Definitions:

Estimated Warranty Expense

Estimated Warranty Expense is an anticipated cost a company expects to incur related to its product warranties, predicting repairs or replacements it will provide for products sold within a given period.

Average Cost

A method of inventory valuation which calculates the cost of goods sold and ending inventory based on the average cost of all similar items.

Journal Entries

These are records of all the financial transactions of a business, recorded in the chronological order in which they occur.

Units Sold

The total quantity of products or goods a company has sold during a particular period.