Friedrich Company Has Developed Ideal Standards for Four Activities: Labour

question 15

Multiple Choice

Friedrich Company has developed ideal standards for four activities: labour, materials, inspection, and receiving.
Information is as follows:
$\begin{array}{llccc}\underline{\text { Activity }} &\underline{ \text { Activity Driver }} & \underline{\text {S Q}} & \underline{\text {A Q}}&\underline{\text {SP}}\\\text { Inspection } & \text { Inspection hours } & 0 & 40,000&\$4 \\\text { Labour } & \text { Hours } & 50,000 & 56,000&6 \\\text { Materials } & \text { Kilograms } & 100,000 & 105,000 &5\\\text { Receiving } & \text { Orders } & 150 & 190&150\end{array}$


The actual prices paid per unit of each activity driver were equal to the standard prices.
-Refer to the figure.What are the value-added costs for materials?

• A)$525,000
• B)$500,000
• C)$50,000
• D)$25,000

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Definitions:

Economic Variable

A measurable quantity that represents a component of economic performance or behavior, such as GDP, unemployment rate, or inflation.

Rational Decision Makers

Individuals or organizations that make choices that maximize their utility, based on systematic analysis of options and outcomes.

Expected Marginal Benefit

The additional benefit perceived by a consumer or producer from consuming or producing one more unit of a good or service.

Expected Marginal Cost

Refers to the anticipated increase in cost for producing one additional unit of a good or service.