Solved

Pasternik Company Produces and Sells Two Products, Alpha and Zeta

question 3

Multiple Choice

Pasternik Company produces and sells two products, Alpha and Zeta. The following information is available relating to its setup activities: $\begin{array}{lrr} & \text { Alpha } & \text { Zeta } \\\text { Units produced } & 250 & 20,000 \\\text { Batch size (units) } & 10 & 500 \\\text { Total direct labor hours } & 1,000 & 39,000 \\\text { Cost per setup } & \$ 2,000 & \$ 2,000\end{array}$ Use of activity-based costing would allocate the following amounts of setup cost to each unit (rounded to the nearest cent) : $Pasternik Company produces and sells two products, Alpha and Zeta. The following information is available relating to its setup activities: \begin{array}{lrr} & \text { Alpha } & \text { Zeta } \\ \text { Units produced } & 250 & 20,000 \\ \text { Batch size (units) } & 10 & 500 \\ \text { Total direct labor hours } & 1,000 & 39,000 \\ \text { Cost per setup } & \$ 2,000 & \$ 2,000 \end{array} Use of activity-based costing would allocate the following amounts of setup cost to each unit (rounded to the nearest cent) : A) Option A B) Option B C) Option C D) Option D E) Option E$

Definitions:

Business Combination

The process of merging or acquiring another company to expand operations, enter new markets, or acquire new technologies.

Equipment (Net) Account

The value of a company's equipment after accounting for depreciation or amortization.

Consolidated

The combination of financial statements of a parent company and its subsidiaries into one comprehensive financial statement, presenting the business as a single economic entity.