Lamour Corporation Is a Job Order Costing Company That Uses

question 69

Multiple Choice

Lamour Corporation is a job order costing company that uses activity-based costing to apply overhead to jobs. The following overhead activities were budgeted for the year. $$\begin{array} { | l | c | c | c | } \hline \text { Activity } & \text { Cost } & \text { Driver } & \text { Amount of driver } \\\hline \text { setups } & \$ 240,000 & \text { number of setups } & 6,000 \\\hline \text { purchasing } & 160,000 & \text { number of parts } & 20,000 \\\hline \text { other overhead } & 300,000 & \text { direct labor hours } & 80,000 \\\hline\end{array}$$
The following information about the jobs was given for April.
$$\begin{array} { | l | r | r | r | r | } \hline & \text { Job 101 } & \text { Job 102 } & \text { Job 103 } & \text { Job 104 } \\\hline \text { Balance 4/1 } & \$ 64,900 & \$ 40,770 & \$ 30,500 & 0 \\\hline \text { direct materials } & 54,000 & 37,900 & 25,000 & 11,000 \\\hline \text { direct labor } & 80,000 & 38,500 & 43,000 & 21,000 \\\hline \text { number of setups } & 40 & 10 & 30 & 200 \\\hline \text { number of parts } & 300 & 80 & 400 & 500 \\\hline \text { direct labor hours } & 5,000 & 2,400 & 5,200 & 1,200 \\\hline\end{array}$$
By April 30, Jobs 102 and 103 were completed and sold. The remaining jobs were still in process.
What is the cost of job 102?

• A)$ 86,440
• B)$ 127,210
• C)$ 117,170
• D)none of the above

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Definitions:

Price Leadership

A situation where a leading company sets prices that other firms in the market follow.

Tacit Collusion

An unspoken, informal agreement among competitors to avoid competitive behaviors like price wars, leading to higher prices for consumers.

Oligopolies

Market structures in which a few large firms dominate the industry, having significant market power to influence prices and terms of sale.

Market Power

The ability of a firm to influence or control the price and output level in the market.