Sarah Company Has Two Products: T and V $\quad$ $\quad$

question 33

Multiple Choice

Sarah Company has two products: T and V. The company uses activity-based costing and has prepared the following analysis, showing the estimated total overhead cost and expected activity for each of its three activity cost pools:
$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\text { Expected Activity }$
$\begin{array} { | l | r | r | r | r | } \hline \begin{array} { l } \text { Activity Cost } \\\text { Pool }\end{array} & \text { Estimated Cost } & \text { Product T } & \text { Product V } & \text { Total } \\\hline \text { Activity 1 } & \$ 30,000 & 200 & 400 & 600 \\\hline \text { Activity 2 } & 39,000 & 400 & 900 & 1,300 \\\hline \text { Activity 3 } & 80,000 & 400 & 3,600 & 4,000 \\\hline\end{array}$ The annual production and sales of Product T is 10,640 units. The annual production and sales of Product V is 26,600.


-The overhead cost per unit of Product T under activity-based costing is closest to which of the following?

• A) $4.00.
• B) $28.66.
• C) $2.81
• D) $10.04.

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Definitions:

Negative Correlation

A relationship between two variables where one variable increases as the other decreases, and vice versa.

Alcohol Consumption

The intake of beverages containing ethanol, which can have various effects on health and behavior depending on the amount and frequency of use.

Independent Variables

Factors in an experiment that are intentionally manipulated to observe their effect on dependent variables.

Dependent Variables

Variables in an experiment that are expected to change as a result of manipulations in the independent variables.