Matthew Company Manufactures Two Models of Pens,a Standard Model and a Deluxe

question 2

Multiple Choice

Matthew Company manufactures two models of pens,a standard model and a deluxe model.Three activities have been identified in the production of the pens.The following information is available:
$\begin{array} { l }\text { Direct }&\text { Number of }&\text { Number of }&\text { Number of }\\\text { Product }&\text { Setups }& \text { Components } & \text { Labor Hours }\\\text { Standard } & 22 & 8 & 375 \\\text { Deluxe } & 28 & 12 & 225\end{array}$

$$\begin{array} { l l c } \text { Cost pool } & \text { Total costs } & \text { Cost Driver } \\\hline\text { Setup Costs } & \$ 15,000 & \text { Number of setups} \\\text { Assembly Costs }&\$36,000& \text { Number of components} \\\text { Labor Costs }&\$9,000& \text { Number of direct labor hours} \\\end{array}$$
If activity-based costing is used,the total costs assigned to the standard model are ________.

• A) $22,500
• B) $26,625
• C) $33,375
• D) $37,500

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Definitions:

Inventory Destroyed

Inventory destroyed refers to stock that has been lost, damaged beyond repair, or otherwise rendered unsellable, and must be written off as a loss.

Perpetual Inventory System

A continuous tracking method for inventory that records the sale or purchase of inventory immediately through the use of computerized point-of-sale systems and enterprise asset management software.

LIFO

Last In, First Out, an inventory accounting method where the last items placed in inventory are the first ones to be used or sold.

Ending Inventory

Products' value that is available for transaction at the culmination of an economic period.