Use the Information Below to Answer the Following Question(s)

question 158

Multiple Choice

Use the information below to answer the following question(s) :
Cooper's Bags Company manufactures cloth grocery bags to be sold to grocery stores and other retailers. Cooper's Bags Company sells the bags in cases of 1,000 bags. The bags come in three sizes: Large, Medium, and Small. Currently, Cooper's Bags Company uses a single plantwide overhead rate to allocate its $8,088,000 of annual manufacturing overhead. Of this amount, $2,210,000 is associated with the Large Bag line, $3,418,800 is associated with the Medium Bag line, and $2,459,200 is associated with the Small Bag line. Cooper's Bags Company is currently running a total of 40,000 machine hours; 13,000 in the Large Bag line, 15,400 in the Medium Bag line, and 11,600 in the Small Bag line. Cooper's Bags Company uses machine hours as the cost driver for manufacturing overhead costs.
-Which product line(s) have been overcosted or undercosted by using the plantwide manufacturing overhead rate?

• A) Large Bags has been undercosted; Medium and Small have been overcosted.
• B) Large, Medium, and Small Bags have all been overcosted.
• C) Large, Medium, and Small Bags have all been undercosted.
• D) Large Bags has been overcosted; Medium and Small have been undercosted.

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Definitions:

Target Market Demographics

The specific characteristics of a population segment at which a company aims its products or services, such as age, gender, income level, and education.

Lower-Price Competitors

Firms that offer products or services at a lower cost compared to other competitors in the market.

Technical Breakthroughs

Significant advancements or innovations in technology that fundamentally change processes, products, or industries.

High-Quality Products

Items that meet or exceed customer expectations in terms of performance, durability, and reliability.