Westvaco Inc

question 19

Essay

Westvaco Inc. has two divisions. Gross profit computations for these two divisions for the year 2012 are given below:

*Manufacturing overhead is allocated to products based on the amount of direct labor dollars.
Westvaco has determined that its total manufacturing overhead cost of $400,000 is a mixture of batch-level and product line costs. The following information has been assembled regarding overhead:

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Definitions:

Retention Cue

A retention cue is a stimulus or reminder that aids in the recall of information from memory.

Vivid Memory

A particularly clear and detailed memory of an event or moment, often with emotional significance, that remains strong over time.

Ignoring Base Rates

Involves disregarding statistical information in favor of anecdotal evidence when making judgments.

Availability Bias

A cognitive bias that makes people overestimate the importance of information that is available to them, leading to a misrepresentation of reality.