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:

Output Level

The quantity of goods or services produced by a firm or economy in a certain period.

Nondiscriminating

A principle or practice that ensures equal treatment and opportunities for all, without biases or prejudices based on irrelevant characteristics.

Pure Monopolist

A single seller in a market with no close substitutes for its product, dictating the market terms and prices.

Profit-Maximizing

A strategy where a firm determines the price and output level that returns the greatest profit.