Franklin Company Uses Activity-Based Costing,and Normally Produces 1,000,000 Units Per

question 14

Multiple Choice

Franklin Company uses activity-based costing,and normally produces 1,000,000 units per month.At this level of production,the costs per unit are as follows:
$\begin{array} { l } \text {Direct materials used }&\$14 \\ \text {Direct labor }&\$6 \\ \text { Variable indirect production}&\$ 1\\ \text {Setup costs }&\$3 \\\end{array}$

For 1,000,000 units,500 setups are required at a cost of $6,000 per setup.The company has received a special order for 100,000 units at $22 per unit.The company has excess capacity.The company estimates that 5 setups will be required for the special order.What is the cost of the special order?

• A) $2,100,000
• B) $2,130,000
• C) $2,400,000
• D) $2, 430,000

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Definitions:

Training Trial

An instance or episode during which a learning process is implemented, aimed at teaching a specific skill or behavior.

Rescorla And Wagner

A model proposing that the strength of learning is determined by the extent to which a conditioned stimulus (CS) is surprising or unexpected, pertaining to classical conditioning.

Learned Irrelevance

The presentation of a stimulus without an unconditioned stimulus (UCS) leads to the recognition that the stimulus is irrelevant, stops attention to that stimulus, and impairs conditioning when the stimulus is later paired with the UCS.

Conditioned Stimulus

A previously neutral stimulus that, after being repeatedly paired with an unconditioned stimulus, starts to trigger a conditioned response similar to the response to the unconditioned stimulus.