Pro Tool Company Expects to Produce 24,000 Total Units During

question 119

Multiple Choice

Pro Tool Company expects to produce 24,000 total units during the current period.The costs and cost drivers associated with four activity cost pools are given below: $\begin{array}{lcccc}\text { ACTIVITIES: } & \text { UNIT } & \text { BATCH } & \text { PRODUCT } & \text { FACILITY } \\& \text { LEVEL } & \text { LEVEL } & \text { LEVEL } & \text { LEVEL } \\\hline\text { Cost } & \$ 50,000 & ? & \$ 10,000 & \$ 120,000 \\ \text { Cost Driver } & \text { 4,000 labor hrs} & 100 \text { set ups } & \% \text { of use } & 24,000 \text { units } \\\end{array}$
Production of 1,000 units of an auto towing tool required 800 labor hours and 12 setups and consumed 30% of the product sustaining activities.How much total overhead cost will be allocated to this product if the company allocates overhead using a single overhead allocation rate based on direct labor hours?

• A) $18,400
• B) $10,000
• C) $100,000
• D) $40,000

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Definitions:

Rational Investor

A person who utilizes logical analysis for making investment choices, with the goal of maximizing gains and reducing risks.

Interest Rate

The cost of borrowing money or the rate paid on deposits, serving as the price of credit or savings in the financial market.

Interest Rate

The proportion of a total amount of money that is levied for borrowing it, usually stated on a yearly basis.

Investment

The allocation of resources, usually money, in assets with the expectation of earning a future return.