Quality Stereo Company Has Provided the Following Information Regarding Its

question 49

Multiple Choice

Quality Stereo Company has provided the following information regarding its activity-based costing system: • Purchasing department costs are allocated based on the number of purchase orders and the cost allocation rate is $75 per purchase order.
• Assembly department costs are allocated based on the number of parts used and the cost allocation rate is $1.00 per part.
• Packaging department costs are allocated based on the number of units produced and the allocation rate is $2.00 per unit produced.
Each stereo produced has 50 parts, and the direct materials cost per unit is $70. There are no direct labor costs. Quality Stereo has an order for 1,000 stereos which will require 50 purchase orders in all. What is the total cost of the 1,000 stereos?

• A)$125,750
• B)$55,750
• C)$123,750
• D)$122,000

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Definitions:

Employment Agreement

A contract between an employer and employee specifying the terms and conditions of the employment relationship, including duties, compensation, and duration.

Electronic Form

Information or documents created, stored, and transmitted in a digital format, accessible through electronic devices.

Contracts Valid

Agreements between parties that meet all legal requirements to be enforceable.

Collateral Promise

An ancillary agreement to answer for the debt or obligation of another person if that person fails to meet their obligation.