Answer the Following Questions Using the Information Below:
Flinders Potters

question 62

Multiple Choice

Answer the following questions using the information below:
Flinders Potters manufactures two sizes of ceramic paperweights,regular and jumbo.The following information applies to their expectations for the planning period:
$$\begin{array} { l c l } \text { Cost Pool } & \text { Overhead Costs } & \text { Activity-cost Driver } \\\text { Materials handling } & \$ 50000 & 100000 \text { orders } \\\text { Machine maintenance } & \$ 300000 & 15000 \text { maintenance hours } \\\text { Set-ups } & \$ 270000 & 45000 \text { set-ups } \\\text { Inspections } & \$ 110000 & 22000 \text { inspections } \\\text { Total support costs } & \$ 730000 & \\\\& { \text { Production Es timates } } \\ & \text { Production urits: } \\& \text { Regular } = 8000000 \text { units } \\& \text { Jumbo } = 16000000 \text { units } \\& \text { Machine-hours } = 200000 \mathrm { mh } \\&\text { Labour-hours } = 400000 \mathrm { dlh }\end{array}$$ Flinders Potters uses an ABC system and assigns overhead costs based on the overhead activity information provided above.
-The inspections activity-cost driver rate is:

• A)$20.00
• B)$2.00
• C)$0.50
• D)$5.00

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Definitions:

Single-Step

An income statement format that consolidates all revenues and gains together and all expenses and losses together, resulting in a single step to determine net income.

Gross Profit

The difference between sales revenue and the cost of goods sold, showing the basic profitability of a company's core business activities.

Multiple-Step

An income statement format that separates operating revenues and expenses from non-operating ones to calculate net income.

Operating Expenses

Costs associated with the daily operations of a business, excluding cost of goods sold, directly related to generating revenue.