The Following Information Is Available Pertaining to the Production Division

question 138

Multiple Choice

The following information is available pertaining to the Production Division of Clarkson Enterprises: $\begin{array} { l c c c } & \text { Assembly Dept. } & \text { Finishing Dept. } & \text { Total } \\ \text { Overhead costs } & \$ 7,500 & \$ 22,500 & \$ 30,000 \\ \text { Direct labor hours } & 7,500 & 2,500 & 10,000 \\ \text { Machine hours } & 2,500 & 7,500 & 10,000 \end{array}$
Production information pertaining to Job 4X5:
$\begin{array}{lrrr}&\text { Assembly Dept. }& \text { Finishing Dept. } &\text { Total }\\\text { Prime costs } & \$ 1,250 & \$ 0 & \$ 1,250 \\\text { Direct labor hours } & 250 & 0 & 250 \\\text { Machine hours } & 0 & 0 & 0\\\text { Units produced }&500&0&500\end{array}$
Based on departmental overhead rates, what is the cost of Job 4X5? Departmental overhead rates for the Assembly Department are based on direct labor hours, while departmental overhead rates for the Finishing Department are based on machine hours.

• A)$7,500
• B)$8,750
• C)$1,500
• D)$1,250

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Definitions:

Consensus

A general agreement among a group of people or in the scholarly literature on a particular issue or topic.

Covariation Principle

A concept in social psychology that explains how we attribute behavior to consistent internal or external factors over time.

Discounting Principle

The tendency to reduce the importance of any potential cause of another’s behavior to the extent that other potential causes exist.

Internal Attribution

The process of assigning the cause of behavior to an individual's internal characteristics or disposition rather than to external factors.