Murphy Company Produces Two Products: Standard and Deluxe

question 161

Multiple Choice

Murphy Company produces two products: Standard and Deluxe.The company uses an activity-based costing system.Murphy produces 8,000 units of Standard and 2,000 units of Deluxe.The company uses two activity cost pools, with estimated total cost and activity as follows: What is the cost per unit of Deluxe under activity-based costing?

• A)$1.75
• B)$11.00
• C)$15.00
• D)$16.00

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Definitions:

Option Contracts

Financial derivatives that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a certain date.

Swap Contracts

Financial agreements between two parties to exchange cash flows or other financial instruments for a specified period of time.

Put Option

A contract in finance that provides the bearer the privilege, but avoids the necessity, to dispense a specific measure of an underlying asset at a particular price during an outlined period.

Options Contract

A contract giving the buyer the right, but not the obligation, to buy (call option) or sell (put option) an underlying asset at a specified price on or before a certain date.