Valpar Company Produces Several Lines of Laundry Hampers Production of 20,000 Units of Its Popular Foldable Hamper Required

question 151

Multiple Choice

Valpar Company produces several lines of laundry hampers.The factory is highly automated and uses an activity-based costing system to allocate overhead costs to its various products.During the upcoming period,the company expects to produce 72,000 units.The costs and cost drivers associated with four activity cost pools are given below: $\begin{array}{lcccc}&\text { UNIT}&\text { BATCH}&\text { PRODUCT}&\text { FACILIT }\\\text { ACTTVTIES: } & \text { LEVEL } & \text { LEVEL } & \text { LEVEL } & \text { LEVEL } \\\hline \text { Cost } & \$ 30,000 & \$ 8,000 & \$ 15,000 & \$ 36,000 \\\text { Cost driver } & \begin{array}{l}12,000 \\\text { labor hrs }\end{array} & \begin{array}{c}200 \text { set } \\\text { ups }\end{array} & \% \text { of use } & 72,000\text{units} \\\end{array}$ Production of 20,000 units of its popular foldable hamper required 3,000 labor hours and 75 setups and consumed one-third of the product sustaining activities.What amount of unit-level costs will be allocated to the product?

• A) $2,500
• B) $7,500
• C) $5,000
• D) $6,000