Canton Corp

question 126

Multiple Choice

Canton Corp. manufactures two sizes of ceramic paperweights, regular and jumbo. The following information applies to their expectations for the planning period:

Expected direct costs amounts to $927,000 for the period. Support cost requirements of both products are substantially different from one another. Zitriks uses an ABC costing system.
Which of the following is true of Canton's overhead costing?

• A) Multiple cost pools are appropriate for Canton's because of high direct costs.
• B) Single cost pool is appropriate for Canton's because of high direct costs.
• C) Multiple cost pools are appropriate for Canton's because of diverse support costs.
• D) Single cost pool is appropriate for Canton's because of diverse support costs.

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Definitions:

Generally Accepted Accounting Principles

A set of widely adhered to principles and guidelines for reporting financial information.

Financial Accounting Standards Board

An independent organization responsible for establishing and improving financial accounting and reporting standards in the United States.

Net Income

The total profit of a company after accounting for all expenses and taxes; also known as net earnings or net profit.

Cash Receipts

The monetary amounts received by a company during a specific period for goods sold, services provided, or any other business activities.