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.
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The allocation rate for materials handling will be:

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

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Definitions:

Economic Activity

The processes that include creating, sharing, and using products and services in an economic system.

Automatic Stabilizers

Financial strategies and initiatives that adapt on their own to mitigate economic variances without requiring direct action from the government.

Discretionary Fiscal Measures

Discretionary fiscal measures are deliberate actions by the government to adjust its spending and taxation rates to influence the nation's economy, akin to discretionary fiscal policy with a focus on specific measures.

Budget Deficits

A financial situation where a government's expenditures exceed its revenues over a specified period, leading to borrowing or drawing down reserves.