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

• A)$21.40.
• B)$26.56.
• C)$26.95.
• D)$27.03.

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Definitions:

Shift Left

In software development, the practice of integrating and addressing quality and testing earlier in the development process.

Demand

The total quantity of a good or service that consumers are willing and able to purchase at various prices.

Chipotle

An international chain of fast-casual restaurants specializing in tacos and Mission-style burritos.

Inferior Good

Goods whose demand declines as consumer income rises, distinct from normal goods where demand increases with higher income.