Answer the Following Questions Using the Information Below:
Barnes Corporation

question 49

Multiple Choice

Answer the following questions using the information below:
Barnes Corporation manufactures two models of office chairs,a standard and a deluxe model.The following activity and cost information has been compiled:
$$\begin{array} { l r r r } \text { Product } & \begin{array} { r } \text { Number of } \\\text { Set-ups }\end{array} & \begin{array} { r } \text { Number of } \\\text { Components }\end{array} & \begin{array} { r } \text { Number of } \\\text { Direct Labour Hours }\end{array} \\\hline \text { Standard } & 22 & 8 & 500 \\\text { Deluxe } & 28 & 12 & 300 \\\text { Overhead costs } & \$ 30000 & \$ 60000 &\end{array}$$
-Number of set-ups and number of components are identified as activity-cost drivers for overheads.Assuming an activity-based costing system is used,what is the total amount of overhead costs assigned to the standard model?

• A)$35 200
• B)$24 800
• C)$37 200
• D)$22 500

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Definitions:

Marginal Cost

The cost increase associated with the production of an extra unit of a product or service.

Market Price

The present cost at which a product or service is available for purchase or sale in the market.

Market Price

The current value at which a good or service can be bought or sold in a marketplace, influenced by supply and demand.

Profit-Maximizing

Refers to the process or strategy aimed at achieving the highest possible profit, where marginal cost equals marginal revenue.