Reynoso Corporation Manufactures Titanium and Aluminum Tennis Racquets Reynoso Is Considering Switching from One Overhead Rate Based on Costs

question 137

Multiple Choice

Reynoso Corporation manufactures titanium and aluminum tennis racquets.Reynoso's total overhead costs consist of assembly costs and inspection costs.The following information is available: $\begin{array}{lccc}\text { Cost }&\text { Titanium }&\text { Aluminum }&\text { Total Cost }\\\text { Assembly } & 500 \text { mach. hours } & 500 \text { mach. hours } & \$ 45,000 \\\text { Inspections } & 350 & 150 & \$ 75,000 \\& 2,100 \text { labor hours } & 1,900 \text { labor hours } &\end{array}$ Reynoso is considering switching from one overhead rate based on labor hours to activity-based costing. Using activity-based costing, how much inspections cost is assigned to titanium racquets?

• A)$30,000.
• B)$47,500.
• C)$50,000.
• D)$70,000.

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Definitions:

Performance

The act of fulfilling the requirements as stipulated in a contract or agreement.

Obligor

An individual or entity that is legally bound to fulfill an obligation, such as making a payment or performing a service, under a contract.

Notice

Formal information or warning given to a person or public about an event, decision, or action.

Assignment Valid

Refers to the legal transfer of one party's rights and benefits under a contract to another party, recognized as legitimate and binding.