Windsor Co Using ABC, How Much Overhead Is Assigned to Product X

question 17

Multiple Choice

Windsor Co. incurs $1,050,000 of overhead costs each year in its three main departments, machining ($600,000) , inspections ($300,000) and packing ($150,000) . The machining department works 4,000 hours per year, there are 600 inspections per year, and the packing department packs 1,000 orders per year. Information about Windsor's two products is as follows: $\begin{array}{lrr}&\text { Broduct } X &\text { Broduct } Y\\\text { Machining hours } & 1,000 & 3,000 \\\text { Inspections } & 100 & 500 \\\text { Orders packed } & 350 & 650 \\\text { Direct labor hours } & 1,700 & 1,800\end{array}$ Using ABC, how much overhead is assigned to Product X this year?

• A) $252,500
• B) $363,462
• C) $510,000
• D) $525,000

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Definitions:

Inventory Reconciliation

The process of verifying that actual inventory matches recorded inventory, often involving adjustments for discrepancies.

Raw Material Inventory

Materials that are usually purchased but have yet to enter the manufacturing process.

Safety Stock Computation

The calculation of a buffer quantity of inventory kept on hand to prevent stockouts, based on variability in demand and supply.

Standard Deviation

A statistical measure of the dispersion or variability within a data set, indicating how much individual values differ from the average.