Bates Company Makes Two Products

question 84

Multiple Choice

Bates Company makes two products.Product X requires 6,000 hours of labor,and Product Y requires 4,000 hours of labor.Bates undertook an automation program that reduced the consumption of labor required by Product X to only 2,000 hours of labor.Product Y was not affected by the automation process.Overhead cost prior to the automation totaled $10,000.After automation,overhead cost amounted to $24,000.Assuming Bates uses direct labor hours as a company-wide allocation base before and after the automation,the amount of overhead cost allocated to:

• A) product X would be $4,000 prior to automation and $16,000 after automation.
• B) product X would be $6,000 prior to automation and $16,000 after automation.
• C) product Y would be $8,000 prior to automation and $8,000 after automation.
• D) product Y would be $4,000 prior to automation and $16,000 after automation.

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Definitions:

Medical Imaging

the technique and process of creating visual representations of the interior of a body for clinical analysis and medical intervention.

Radiologic Imaging

The use of various forms of radiation to create images of the internal structures of the body for diagnostic purposes.

Catheters

Tubes that can be inserted into the body to treat diseases or perform a surgical procedure.

Stents

Tubular support devices inserted into blood vessels, canals, or ducts to keep the passageway open.