Samson Company Recently Installed an Activity-Based Relational Database How Much Machine Overhead Cost Will Be Assigned to Product

question 112

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
$$\begin{array} { | c | l | c | } \hline \text { ActivityDriver \# } & { \text { Name } } & \text { Activity Usage } \\\hline 1 & \text { Units } & 200,000 \\\hline 2 & \text { Purchase Orders } & 250 \\\hline 3 & \text { Machine Hours } & 80,000 \\\hline 4 & \text { Engineering Hours } & 1,250 \\\hline & & \\\hline\end{array}$$ $$\begin{array}{l}\text { Product } M\\\begin{array} { | c | l | l | } \hline \text { Activity Driver \# } & { \text { Name } } & { \text { Activity Usage } } \\\hline 1 & \text { Units } & 25,000 \\\hline 2 & \text { Purchase Orders } & 125 \\\hline 3 & \text { Machine Hours } & 10,000 \\\hline 4 & \text { Engineering Hours } & 1,500 \\\hline\end{array}\\\\\begin{array} { | c | l | c | } \hline \text { ActivityDriver \# } &{ \text { Name } } & \text { Activity Usage } \\\hline 1 & \text { Units } & 200,000 \\\hline 2 & \text { Purchase Orders } & 250 \\\hline 3 & \text { Machine Hours } & 80,000 \\\hline 4 & \text { Engineering Hours } & 1,250 \\\hline & & \\\hline\end{array}\end{array}$$
How much machine overhead cost will be assigned to Product L using Process 1?

• A)$2,400,000
• B)$4,800,000
• C)$1,920,000
• D)$240,000

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