Pro Tool Company Expects to Produce 24,000 Total Units During

question 148

Multiple Choice

Pro Tool Company expects to produce 24,000 total units during the current period.The costs and cost drivers associated with four activity cost pools are given below: $\begin{array}{c}\begin{array}{|l|} \hline \text {ACTIVITIES:}\\ \hline \\\hline \text {Cost}\\ \hline \\ \hline \text {Cost Driver}\\\hline \end{array}\begin{array}{c|}\hline \text {UNIT}\\\hline \text { LEVEL }\\\hline \$ 50,000\\\hline \\\hline \text {4,000 labor hrs}\\\hline \end{array}\begin{array}{c|}\hline \text { BATCH}\\\hline \text { LEVEL }\\\hline \$ 20,000\\\hline\\\hline \text { 100 set ups}\\\hline \end{array}\begin{array}{c|} \hline \text {PRODUCT}\\ \hline \text { LEVEL }\\ \hline\$ 10,000 \\ \hline\\ \hline \% \text { of use}\\ \hline\end{array}\begin{array}{c|} \hline \text {FACILITY}\\ \hline \text { LEVEL }\\ \hline \$ 120,000\\ \hline\\ \hline24,000 \text {units}\\ \hline\end{array}\end{array}$
Production of 1,000 units of an auto towing tool required 800 labor hours,12 setups,and consumed 30% of the product sustaining activities.How much total overhead cost will be allocated to this product if the company allocates overhead on the basis of a single overhead allocation rate based on direct labor hours?

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Definitions:

Wage Rate

The amount of money paid to an employee per unit of time or for each unit of output produced.

Demand Schedule

A table or graph that shows the quantity of a good or service that consumers wish to buy at each price level.

Marginal Product

The additional output that is generated by employing one more unit of a specific factor of production, keeping other inputs constant.

Marginal Revenue Product

The additional revenue generated from using one more unit of a factor of production, holding other factors constant.