Sandler Company Has Identified the Following Activities Related to Indirect

question 15

Short Answer

Sandler Company has identified the following activities related to indirect production costs:
$$\begin{array} { l l l } \text { Activity } & \text { Activity Costs } & \text { Cost Drivers } \\\text { Machine Setup } & \$ 180,000 & 1,500 \text { setup hours } \\\text { Materials Handling } & \$ 50,000 & 12,500 \text { pounds of materials } \\\text { Electric Power } & \$ 20,000 & 20,000 \text { kilowatt hours }\end{array}$$
Sandler Company has obtained the following data concerning two products:
$$\begin{array} { l l l } &\text { Prodirct } A&\text { Prodirct } B\\\text { Number of units produced } & 4,000 & 20,000 \\\text { Direct materials cost } & \$ 20,000 & \$ 25,000 \\\text { Direct labor cost } & \$ 12,000 & \$ 20,000 \\\text { Number of setup hours } & 100120 & \\\text { Pounds of materials used } & 5001,500 & \\\text { Kilowatt-hours } & 1,000 & 2,000\end{array}$$
Using activity-based costing,what amount of electric power cost is assigned to Product A and Product B?
$\begin{array}{ll}&\text { Prodirct } A&\text { Prodirct } B\\A)&\$ 1,000 & \$ 2,000 \\B)&\$ 3,333 & \$ 16,667 \\C)&\$ 5,000 & \$ 15,000 \\D)&\$ 6,667 & \$ 13,333\end{array}$

• A)&\$ 1,000 & \$ 2,000 \\
• B)&\$ 3,333 & \$ 16,667 \\
• C)&\$ 5,000 & \$ 15,000 \\
• D)&\$ 6,667 & \$ 13,333
• \end{array}\)

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Definitions:

Expense Forecasts

Projections or estimates of future costs and expenses that a business or organization is likely to incur over a specific period.

Market Description

An overview or summary that outlines the characteristics and dynamics of a specific market, including potential customers and competitors.

Diversification

A strategy of investing in a variety of assets to reduce risks associated with any single investment.

SWOT Analysis

A strategic planning tool that assesses the Strengths, Weaknesses, Opportunities, and Threats related to a business or project.