The Manoli Company Has Collected the Following Data for Use

question 145

Multiple Choice

The Manoli Company has collected the following data for use in calculating product costs: Activity Data: (expected and actual) $\begin{array}{|l|l|l|l|}\hline & \text { Rug Cleaners } & {\text { Sw eepers }} & {\text { Total }} \\\hline \text { Units Froduced } & 50,000 & 250,000 & 300,000 \\\hline \text { Prime Costs } & \$ 200,000 & \$ 750,000 & \$ 950,000 \\\hline \text { Direct Labor Hours } & 10,000 & 40,000 & 50,000 \\\hline \text { Machine Hours } & 20,000 & 10,000 & 30,000 \\\hline \text { Number of Setups } & 25 & 75 & 100 \\\hline \text { Inspection Hours } & 1200 & 2,800 & 4,000 \\\hline \text { Number of Moves } & 140 & 210 & 350 \\\hline\end{array}$
$\text { Departmental Data: (expected and actual) }$
$\begin{array}{|l|l|l|l|} \hline&{\text { Molding }} & \text { Assembly } & \text { T otal } \\\hline \text { Direct Labor Hours } & & & \\\hline \text { Rug Cleaners } & 5,000 & 5,000 & 10,000\\\hline\text { Sweepers }\\\hline\text { Total } & 10,000 & 40,000 & 50,000 \\\hline \text { Machine Hours } & & & \\\hline \text { Rug Cleaners } & 17,000 & 3,000 & 20,000 \\\hline \text { Sweepers } & 3,000 & 7,000 & 10,000 \\\hline \text { Total } & 20,000 & 10,000 & 30,000 \\\hline \text { Overhead Costs } & & & \\\hline \text { Machining } & 120,000 & \$ 30,000 & 150,000 \\\hline \text { Mowing Materials } & 40,000 & 30,000 & 70,000 \\\hline \text { Setting Up } & 70,000 & 10,000 & 80,000 \\\hline \text { Inspecting Products } & 20,000 & 30,000 & \$ 0,000 \\\hline \text { Total } & \$ 250,000 & \$ 100,000 & \$ 350,000 \\\hline\end{array}$
What is the unit product cost for rug cleaners if a plantwide rate is used based on direct labor hours?

• A)$11.00
• B)$4.00
• C)$5.40
• D)$4.12

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Definitions:

Deviation

Difference between expected payoff and actual payoff.

Expected Value

The weighted average of all possible values of a random variable, with the weights being the probabilities of each outcome.

Absolute Value

The distance of a number from zero on the number line, disregarding its sign.

Payoff

The outcome or return from an investment or decision, often expressed in terms of profit or loss.