Louis Corporation,which Uses an Activity-Based Costing System,produces Travel Trailers and Boat

question 58

Multiple Choice

Louis Corporation,which uses an activity-based costing system,produces travel trailers and boat trailers.The company allocates batch setup costs to the two products using the following basic data:

Total budgeted setup costs for the year are $140,000.
If the setup costs are allocated using direct labour hours,how much of the total setup costs would be allocated to boat trailers?

• A)$60,000
• B)$105,000
• C)$140,000
• D)$326,667

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Definitions:

Sales Volume

The quantity of products or services sold within a specific period, not taking into account the sales price.

Unit Product Costs

The total cost associated with producing a single unit of product, including labor, materials, and overhead.

Variable Costing

An accounting method that only includes variable production costs in product costs, excluding fixed manufacturing overhead.

Direct Material Cost

The expense associated with raw materials or components directly used in the manufacturing of a product.