Exhibit 3-2
Dublin Pie Company Sells Cherry Pies and Apple

question 5

Multiple Choice

Exhibit 3-2
Dublin Pie Company sells cherry pies and apple pies in bulk online.Estimated overhead costs for 2016 total $600,000.The accountant for Dublin identified the following information for its activity-based costing system.
$\begin{array}{llc}\text { Activity } & \text { Allocation Base } & \text { Proportion of Total Overhead Cost } \\\hline \text { Purchasing } & \text { Number of purchase orders } & 25 \% \\\text { Processing } & \text { Number of units } & 60 \% \\\text { Sales } & \text { Number of sales orders } & 15 \%\end{array}$
The estimated activity level for each type of pie and in total is as follows:
$\begin{array}{lrrr}&\text { Cherry Pies } & \text { Apple Pies } & \text { Total }\\\text { Number of purchase orders } & 10,000 & 15,000 & 25,000 \\\text { Number of units } & 30,000 & 70,000 & 100,000 \\\text { Number of sales orders } & 1,000 & 4,000 & 5,000\end{array}$

-Refer to Exhibit 3-2.How much total overhead should be assigned to Sales Order 115 for Cherry Pies,if it requires 2 purchase orders for a total of 300 pies (or units) ?

• A)$12
• B)$1,080
• C)$18
• D)$1,110
• E)None of the answer choices is correct.

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Definitions:

Fair Insurance Policy

A policy that is considered equitable, offering terms and conditions that are reasonable and just for both the insurer and the insured, without exploiting any party.

Premium

An amount paid for an insurance policy, reflecting the cost of obtaining insurance coverage.

Expected Value

A calculated average of the possible outcomes of a variable, taking into account the likelihood of each outcome.

Fair Insurance Policy

An insurance agreement that is considered equitable and just, providing a balanced distribution of risks and benefits for both insurer and insured.