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Riley, SA, Has Identified the Following Overhead Costs and Activity Drivers

question 30

Multiple Choice

Riley, SA., has identified the following overhead costs and activity drivers for next year: $\begin{array}{lclc}\text { Expected }&&\text { Expected }\\\text { Overhead Item }&\text { Cost } & \text { Activity Driver } & \text { Quantity }\\\text { Setup costs } & £ 100,000 & \text { Number of setups } & 500 \\\text { Ordering costs } & 40,000 & \text { Number of orders } & 3,200 \\\text { Maintenance } & 200,000 & \text { Machine hours } & 4,000 \\\text { Power } & 20,000 & \text { Kilowatt hours } & 80,000\end{array}$ The following are two of the jobs completed during the year: $\begin{array}{lll}&\mathrm{Job} \text { AA} &\mathrm{Job} \text { BB }\\\text { Direct materials } & £ 375 & £ 1,000 \\\text { Direct labour } & £ 350 & £ 1,200 \\\text { Units completed } & 100 & 160 \\\text { Direct labour hours } & 50 & 80 \\\text { Number of setups } & 1 & 4 \\\text { Number of orders } & 4 & 5 \\\text { Machine hours } & 20 & 25 \\\text { Kilowatt hours } & 30 & 50\end{array}$ The company's normal activity is 4,000 direct labour hours. If the activity drivers are used to allocate overhead costs, the unit cost (rounded to two decimal places) for Job BB would be

Definitions:

Normal Distribution

Normal distribution, often called a bell curve, describes a symmetrical distribution of data where most values cluster around a central mean.

Outliers

Outliers are data points that differ significantly from other observations, often lying far outside the majority of a data distribution.

Parameter

A numeric characteristic that describes and summarizes an entire population of data.

Statistic

A characteristic or measure obtained from a sample of data, used to estimate the value of a population parameter.