A Company Incurs $3,600,000 of Overhead Each Year in Three

question 138

Multiple Choice

A company incurs $3,600,000 of overhead each year in three departments: Processing, Packaging, and Testing.The company performs 800 processing transactions, 200,000 packaging transactions, and 2,000 tests per year in producing 400,000 drums of Oil and 600,000 drums of Sludge.The following data are available: $$\begin{array}{l}\begin{array} { l c r } \text { Department } & \text { Expected Use of Driver } & { \text { Cost } } \\\text { Processing } & 800 & \$ 1,500,000 \\\text { Packaging } & 200,000 & 1,500,000 \\\text { Testing } & 2,000 & 600,000\end{array}\\\text { Production information for the two products is as follows: }\\\\\begin{array}{ll}&\text { Oil }&\text { Sludae }\\\text { Department }&\text { Expected Use of Driver }&\text { Expected Use of Driver }\\\hline \text { Processing } & 300 & 500 \\\text { Packaging } & 120,000 & 80,000 \\\text { Testing } & 1,600 & 400\end{array}\end{array}$$ The amount of overhead assigned to Sludge using ABC is

• A)$1,800,000.
• B)$1,657,500.
• C)$1,942,500.
• D)$1,380,000.

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Definitions:

Programmed Aging

The theory that aging results from an organism's genetic programming, suggesting that the process of aging is predetermined and built into the biology of an organism.

Primary Aging

The gradual and inevitable process of bodily deterioration that occurs throughout life, unaffected by disease or environmental factors.

Longevity

The length of time that an individual lives or a thing exists, often referring to a life span exceeding the average.

Genetic Traits

Hereditary characteristics passed from parents to offspring through genes, such as eye color, blood type, and susceptibility to certain diseases.