Samson Company Recently Installed an Activity-Based Relational Database Product M

question 41

Multiple Choice

Samson Company recently installed an activity-based relational database. Using the information contained in the activity relational table, the following pool rates were computed: $400 per purchase order
$24 per machine hour, Process 1
$30 per machine hour, Process 2
$80 per engineering hour
Two products are produced by Special Products: L and M. The plant has two manufacturing processes, Process 1 and Process 2. Other processes include engineering, product handling, and procurement. Product L goes through Process 1 while Product M goes through Process 2. The product relational table for Special Products is as follows:
Product L
$\begin{array}{|c|l|c|}\hline \text { ActivityDriver \# } &{\text { Name }} & \text { Activity Usage } \\\hline 1 & \text { Units } & 200,000 \\\hline 2 & \text { Furchase Orders } & 250 \\\hline 3 & \text { Machine Hours } & 80,000 \\\hline 4 & \text { Engineering Hours } & 1,250 \\\hline & & \\\hline\end{array}$
Product M
$\begin{array}{|c|l|l|}\hline \text { Activity Driver \# } &{\text { Name }} & {\text { Activity Usage }} \\\hline 1 & \text { Units } & 25,000 \\\hline 2 & \text { Furchase Orders } & 125 \\\hline 3 & \text { Machine Hours } & 10,000 \\\hline 4 & \text { Engineering Hours } & 1,500 \\\hline\end{array}$

$\begin{array}{|c|l|c|}\hline \text { ActivityDriver \# } &{\text { Name }} & \text { Activity Usage } \\\hline 1 & \text { Units } & 200,000 \\\hline 2 & \text { Purchase Orders } & 250 \\\hline 3 & \text { Machine Hours } & 80,000 \\\hline 4 & \text { Engineering Hours } & 1,250 \\\hline & & \\\hline\end{array}$ How much engineering overhead cost will be assigned to Product M using engineering hours?

• A)$100,000
• B)$120,000
• C)$2,000,000
• D)$801,000

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Definitions:

Obligor

A contractual party who agreed to do something for the other party.

Merger Clause

A clause in a written agreement within the statute of frauds that states that the written agreement accurately reflects the final, complete version of the agreement.

Statute of Frauds

A legal principle that requires certain types of contracts to be written and signed to be enforceable.

Obligor's Consent

The necessary agreement or permission from the party obligated to perform under a contract or legal duty.