Durable Engines Company Uses ABC to Account for It Manufacturing

question 113

Multiple Choice

Durable Engines Company uses ABC to account for it manufacturing process. $$\begin{array} { | l | c | l | } \hline \text { Activities } & { \begin{array} { c } \text { Indirect activity } \\\text { budget }\end{array} } & \text { Allocation base (cost driver) } \\\hline \text { Materials handling } & \$ 36,000 & \text { Based an number af parts } \\\hline \text { Maching setup } & \$ 19,200 & \text { Based an number of setups } \\\hline \text { Assembling } & \$ 6,000 & \text { Based an number of parts } \\\hline \text { Packaping } & \$ 12,800 & \text { Based an number af finished units } \\\hline\end{array}$$ 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 materials handling will be:

• A)$ 5.28.
• B)$ 6.40.
• C)$ 3.00.
• D)$18.00.

---

Definitions:

Homogeneous Oligopoly

A market structure in which a few companies sell products that are identical or very similar, leading to high levels of competition on price rather than product differentiation.

Industrial Alcohol

Alcohol used for industrial purposes, including manufacturing and as a fuel or solvent, rather than for consumption.

Interproduct Competition

Interproduct Competition refers to the competition between different products that serve similar purposes, encouraging diversity and improvement in the market.

Monopolistic Competition

A market structure where many companies sell products that are similar but not identical, allowing for competition based on other factors than price.