Andiamo Manufacturing Produces Two Types of Tablets: Basic and Deluxe

question 73

Multiple Choice

Andiamo Manufacturing produces two types of tablets: basic and deluxe. The tablets are produced using one continuous process. Four activities have been identified: machining, setups, receiving, and packing. Resource drivers have been used to assign costs to each activity. The overhead activities, their costs, and the other related data are as follows:
$$\begin{array} { l r r r r } \text { Product } & \text { Machine Hours } & \text { Setups } & \text { Receiving Orders } & \text { Packing Orders } \\\text { basic } & 20,000 & 200 & 100 & 800 \\\text { deluxe } & 20,000 & 500 & 400 & 4,000 \\\text { Costs } & \$ 80,000 & \$ 60,000 & \$ 10,000 & \$ 30,000\end{array}$$
-Refer to the Figure.What is the consumption ratio for setups on the deluxe?

• A)0.500
• B)0.688
• C)0.700
• D)0.714

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Definitions:

Joint Cost

Costs that are incurred in the process of producing two or more products simultaneously and cannot be easily attributed to individual products.

Value Basis

A method for calculating the cost of an investment, typically used to determine the gain or loss on the sale or disposition of the asset.

Golf Course Lots

Parcels of land designated or developed for the purpose of constructing golf courses, often classified as commercial real estate.

Expense Allocation

The process of assigning or distributing indirect costs to different departments, projects, or products.