Horton Company Produces and Sells Two Products: Round and Square

question 105

Multiple Choice

Horton Company produces and sells two products: round and square tables. In August 20x4, the budget projected the following for 20x5: Budgeted data for 20x5 direct labour and overhead are:
Direct labour:
Round 4 hours per unit at $6 per hour
Square 6 hours per unit at $8 per hour
Overhead: $4 per direct labour hour
Total budgeted production of tables in 20x5 is:

• A) 12,000 units
• B) 10,000 units
• C) 6,500 units
• D) 14,000 units

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Definitions:

Variable Cost

Expenses that fluctuate in direct proportion to changes in output or activity level, including costs like supplies and commission fees.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including the cost of the materials and labor used in production.

Opportunity Cost

The expense incurred by not choosing the second-best option available during decision-making.

Product Costs

The total costs directly involved in manufacturing a product, including material, labor, and overhead expenses.