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

question 119

Multiple Choice

Michael 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 cost assigned to the deluxe model is ________.

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