Wadsworth Industries Manufactures Small Appliances and Uses an Activity-Based Costing

question 30

Multiple Choice

Wadsworth Industries manufactures small appliances and uses an activity-based costing system. Information from its system for the year for all products follows: Wadsworth makes 775 of its stand mixers a year, which requires a total of 25 machine hours, 10 inspection hours, and 12 orders. The stand mixer requires $15.00 in direct materials per unit and $11.50 in direct labor per unit. The stand mixer sells for $120 per unit. What is the product margin in total for the stand mixer?

• A)$91,979.50
• B)$26.50
• C)$20,537.50
• D)$71,468.50

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Definitions:

Specialized Inputs

Resources or materials that are tailored for specific tasks or industries, enhancing the efficiency and quality of production.

Rent-Seeking Behavior

Activities by individuals or firms aimed at securing economic gain without contributing to productivity, typically through political lobbying for favorable regulations or monopolistic advantages.

X-Inefficiency

The difference between efficient production levels and actual production due to mismanagement, lack of competitive pressure, or other organizational inefficiencies.

Pure Competition

A market structure characterized by an extremely large number of sellers and buyers where no single participant has the market power to influence product prices.