Zimmerman Company Manufactures Two Products, Board 12 and Case 165

question 143

Multiple Choice

Zimmerman Company manufactures two products, Board 12 and Case 165.Zimmerman's overhead costs consist of setting up machines, $2,400,000; machining, $5,400,000; and inspecting, $1,800,000.Information on the two products is: $$\begin{array} { l r r } & \text { Board 12 } & \text { Case 165 } \\\text { Direct labor hours } & 15,000 & 25,000 \\\text { Machine setups } & 600 & 400 \\\text { Machine hours } & 24,000 & 26,000 \\\text { Inspections } & 800 & 700\end{array}$$ Overhead applied to Case 165 using activity-based costing is

• A)$3,840,000.
• B)$4,608,000.
• C)$4,992,000.
• D)$6,000,000.

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Definitions:

Capital Budgeting

The process of planning and evaluating expenditures on assets whose returns are expected to extend beyond one year.

Earnings

The amount of profit that a company produces during a specific period.

Signaling Effect

The signaling effect is a theory in economics and finance suggesting that actions taken by a company, such as dividend announcements or share repurchases, send signals to the market about the company’s financial health and prospects.

Stock Prices

Stock prices are the current market price at which shares of a company can be bought or sold. They fluctuate based on demand and supply, company performance, and market conditions.