Figure 3-4
Quint Manufacturing Uses an Activity-Based Costing System The Following Costs Are Reported

question 47

Multiple Choice

Figure 3-4
Quint Manufacturing uses an activity-based costing system. The company produces Model 1 and Model 2. Information relating to the two products is as follows: $$\begin{array} { l r r } \text { Units produced } & \text { Model 1 } & \text { Model } 2 \\\text { Machine hours } & 24,000 & 30,000 \\\text { Direct labour hours } & 7,500 & 8,500 \\\text { Material handling (number of moves) } & 8,000 & 12,000 \\\text { Setups } & 4,000 & 6,000 \\& 5,000 & 7,000\end{array}$$ The following costs are reported: $\begin{array}{lr}\text { Material handling } & £ 40,000 \\\text { Labour-related overhead } & 120,000 \\\text { Setups } & 60,000\end{array}$
-Refer to Figure 3-4. Labour-related overhead costs assigned to Model 1 are

• A)£60,000.
• B)£58,000.
• C)£54,400.
• D)£48,000.

---

Definitions:

Short-Run Total Cost

The sum of all expenses, including both constant and flexible, associated with the production of goods or services over a short period.

Production Function

A mathematical model depicting the relationship between input factors and the output of goods or services.

Labor

The exertion of physical or mental capacities by individuals in the creation of products and services.

Short-Run Total Cost

The total of all costs (fixed and variable) involved in the production of a good or service over a short period.