Auburn,Inc

question 118

Multiple Choice

Auburn,Inc.'s overhead costs of $700,000 consist of machining $400,000; inspecting $200,000; and packaging $100,000.Machining works 4,000 hours a year,500 inspections occur each year,and 1,000 packing order occur each year.Information on the company's two products are as follows: Alpha Omega
Machining hours 1,000 3,000
Inspections 100 400
Packing orders 350 650
Direct labor hours 1,700 1,800
Determine how much overhead is allocated to Alpha assuming the use of a single overhead rate based on direct labor hours and assuming the use of ABC,respectively.

• A)$340,000 and $360,000
• B)$340,000 and $175,000
• C)$360,000 and $175,000
• D)$360,000 and $525,000

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Definitions:

Manufacturing Overhead Costs

Indirect expenses related to the production process, such as utilities, depreciation, and salaries for factory support staff.

Return on Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated by dividing the benefit (return) of an investment by the cost of the investment.

Investment Center

A business unit within an organization that is responsible for its own revenues, expenses, and investments, and is evaluated on its return on investment.

Operating Assets

Assets that are used in the daily operations of a business to generate revenue, such as machinery, buildings, and equipment.