A Company Uses a Long-Run Time Horizon to Price Its

question 12

Multiple Choice

A company uses a long-run time horizon to price its product, an electronic component used in aircraft.To produce a normal production run for a year of 100,000 units direct materials are $90,000; direct labour is $180,000; and, rent on leased equipment is $106,000 per year.Currently re-work is running at 4% of production, after testing.The company has the capacity to test 10 units per hour.Manufacturing Overhead has two cost drivers: testing (cost driver is testing hours at $2.50 per hour) ; and, rework (cost driver is units reworked at $80 per unit re-worked) .Calculate current total manufacturing costs for 100,000 units.

• A)$320,000
• B)$376,000
• C)$396,000
• D)$401,000
• E)$721,000

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Definitions:

Standard Deviation

Standard deviation is a measure of the amount of variation or dispersion in a set of values, indicating how much the values in a dataset deviate from the mean.

Raw Scores

The initial, unadjusted scores obtained directly from a test or assessment.

Test-retest Reliability

A measure of consistency where the same test is administered to the same group at two different points in time to assess the consistency of the results.

National Curve Equivalent

A standardized score that represents a student's relative rank on a national scale.