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Bienvenue, Inc The Company's Normal Activity Is 4,000 Direct Labor Hours

question 72

Multiple Choice

Bienvenue, Inc., has identified the following overhead costs and activity drivers for next year: $\begin{array}{l}\begin{array} { c c c c } \text { Expected } && { \text { Expected } } \\\text { Overhead Item } & \text { Cost } & \text { Activity Driver } & \text { Ouantity } \\\hline \text { Setup costs } & \$ 100,000 & \text { Number of setups } & 500 \\\text { Ordering costs } & 40,000 & \text { Number of orders } & 3,200 \\\text { Maintenance } & 200,000 & \text { Machine hours } & 4,000 \\\text { Power } & 20,000 & \text { Kilowatt hours } & 80,000\end{array}\\\\\text { The following are two of the jobs completed during the year: }\\\begin{array} { l r r } & \text { Job CC } & \text { Job DD } \\\hline \text { Direct materials } & \$ 375 & \$ 1,000 \\\text { Direct labor } & \$ 350 & \$ 1,200 \\\text { Units completed } & 100 & 160 \\\text { Direct labor hours } & 50 & 80 \\\text { Number of setups } & 1 & 4 \\\text { Number of orders } & 4 & 5 \\\text { Machine hours } & 20 & 25 \\\text { Kilowatt hours } & 30 & 50\end{array}\end{array}$ The company's normal activity is 4,000 direct labor hours.
If the activity drivers are used to allocate overhead costs, the unit cost (rounded to two decimal places) for Job DD would be

Definitions:

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, resulting in net profit or loss.

Affect Inventories

Influences on the quantity, value, or type of products a business holds for sale, resulting from factors like demand fluctuations and supply chain issues.

Expense Recognition Principle

An accounting guideline that expenses should be recognized in the period in which they are incurred, regardless of when the payment is made.

Cost Of Goods Sold

Direct expenses involved in producing goods for sale by a company, covering both materials and workforce costs.