Wilder Company Manufactures Two Models of Its Banjo, the Basic

question 61

Multiple Choice

Wilder Company manufactures two models of its banjo, the Basic and the Luxury.The Basic model requires 10,000 direct labor hours and the Luxury requires 30,000 direct labor hours.The company produces 3,400 units of the Basic model and 600 units of the Luxury model each year.The company inspects one Basic for every 100 produced, and inspects one Luxury for every 10 produced.The company expects to incur $84,600 of total inspecting costs this year.How much of the inspecting costs should be allocated to the Basic model using ABC costing?

• A)$21,150
• B)$30,600
• C)$42,300
• D)$71,910

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Definitions:

Directly Proportional

The relationship between two variables where if one variable increases, the other variable increases by the same factor.

Total Revenue

The total income generated from the sale of goods or services, calculated as the unit price multiplied by the quantity sold.

Constant of Proportionality

The constant of proportionality is the factor that relates two variables that are directly proportional to one another.

Stack Emissions

Gases or particles released into the atmosphere from industrial stacks or chimneys.