Durable Engines Company Uses ABC to Account for It Manufacturing

question 36

Multiple Choice

Durable Engines Company uses ABC to account for it manufacturing process.

Durable Engines Company expects to produce 2,000 engines.Durable Engines Company also expects to use 12,000 parts and have 16 setups.
The allocation rate for machine setups is

• A)$1,200.
• B)$800.
• C)$375.
• D)$5.28.

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Definitions:

Fixed Costs

Expenses that do not change with the level of output produced, such as rent, salaries, and insurance.

Real Opportunity Cost

The value of the best alternative forgone as a result of making a particular choice, expressed in terms of real goods and services.

Producing Product

The process of creating goods or services that are offered in the market for consumption or use.

Resources

Assets or inputs used to produce goods and services.