Zimmerman Company Manufactures Two Products, Board 12 and Case 165

question 152

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: $\begin{array}{lrr}&\text { Board } 12&\text { Case } 165\\\text { Direct labor hours } & 15,000 & 25,000 \\\text { Machine setups } & 600 & 400 \\\text { Machine hours } & 24,000 & 26,000 \\\text { Inspections } & 800 & 700\end{array}$ Overhead applied to Board 12 using activity-based costing is

• A) $3,600,000.
• B) $4,608,000.
• C) $4,992,000.
• D) $5,760,000.

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Definitions:

Distribution Centre

A specialized facility that is responsible for receiving, storing, and distributing products to retailers or customers.

Labour Cost

The expense associated with the work performed by employees, encompassing salaries, wages, and additional benefits.

Productivity

The ratio of outputs (goods and services) divided by one or more inputs (such as labour, capital, or management).

Labour Cost Per Unit

The total expense of labor required to produce a single unit of output, encompassing wages, benefits, and any other compensation.