Quality Stereo Company Has Provided the Following Information Regarding Its

question 49

Multiple Choice

Quality Stereo Company has provided the following information regarding its activity-based costing system: • Purchasing department costs are allocated based on the number of purchase orders and the cost allocation rate is $75 per purchase order.
• Assembly department costs are allocated based on the number of parts used and the cost allocation rate is $1.00 per part.
• Packaging department costs are allocated based on the number of units produced and the allocation rate is $2.00 per unit produced.
Each stereo produced has 50 parts, and the direct materials cost per unit is $70. There are no direct labor costs. Quality Stereo has an order for 1,000 stereos which will require 50 purchase orders in all. What is the total cost of the 1,000 stereos?

• A)$125,750
• B)$55,750
• C)$123,750
• D)$122,000

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Definitions:

Three-Bedroom Homes

Residential properties designed with three sleeping rooms, catering to families or groups needing multiple sleeping areas.

Increase

An upward adjustment in size, number, value, or strength.

Percent More

The increase in a quantity measured as a fraction of 100.

Reduced By

To decrease in amount or number by a specified factor or quantity.