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

question 14

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 purchasing overhead cost will be assigned to Product L using the number of purchase orders?

• A)$ 100,000
• B)$ 50,000
• C)$80,000,000
• D)$ 133,500

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Definitions:

Public Good

A product or service that is provided without profit to all members of a society, either by the government or a private individual or organization.

Private Good

A product or service that is consumed by an individual and cannot be used or consumed by others once it is purchased.

Pareto Optimal

Pareto optimal describes a state in an economic system where it’s impossible to make any one individual better off without making at least one individual worse off, indicating an efficiency in resource allocation.

Public Goods

Goods that are non-excludable and non-rivalrous, meaning one person's consumption does not reduce availability for others and cannot exclude others from using them.