Canterra Co Using ABC, How Much Overhead Is Assigned to Product One

question 56

Multiple Choice

Canterra Co.incurs $540,000 of overhead costs each year in its three main departments, setup ($40,000) , machining ($400,000) , and packing ($100,000) .The setup department performs 50 setups per year, the machining department works 8,000 hours per year, and the packing department packs 200 orders per year.Information about Canterra's 2 products is as follows: $\begin{array}{lll}& \underline{\text { Product One }}& \underline{\text {Product Two }}\\\text { Number of setups } & 10 & 40 \\\text { Machining hours } & 3,000 & 5,000 \\\text { Orders packed } & 110 & 90\end{array}$ Using ABC, how much overhead is assigned to Product One each year?

• A)$540,000
• B)$327,000
• C)$270,000
• D)$213,000

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Definitions:

Physical Possession

The direct, physical control or holding of an object or property by an individual or entity.

Bill of Lading

A legal document issued by a carrier to a shipper, detailing the type, quantity, and destination of the goods being transported.

Document of Title

A legal document evidencing the right to control the disposition of goods, such as a bill of lading or warehouse receipt.

Storage of Goods

The act of keeping goods in a space designated for their preservation or until they are sold or distributed.