Franklin Manufacturing Manufactures Two Models of Windows,bay Windows and Casement

question 146

Multiple Choice

Franklin Manufacturing manufactures two models of windows,bay windows and casement windows.Franklin uses an activity-based costing system.The following information about the activities used to produce the company's products has been provided. $$\begin{array} { l c c c c } \text { Category } & \text { Estimated Cost } & \text { Cost Driver } & \text { Bay Windows } & \text { Casement } \\\text { Unit-level } & \$ 125,000 & \text { Labor hours } & 750 & 500 \\\text { Batch-level } & \$ 75,000 & \text { Inspections } & 30 & 20 \\\text { Product-level } & \$ 35,000 & \text { Storage Space } & 3 , 5 0 0 \text { sq feet } & 2,100 \text { sq feet } \\\text { Facility-level } & \$ 165,000 & \text { Machine hours } & 9,000 & 6 , 0 0 0 \end{array}$$ If bay windows and casement windows require the same amount of direct labor,using labor hours as the allocation base for facility-level costs would:

• A) Undercost the casement windows.
• B) Overcost the bay windows.
• C) Undercost both the bay windows and casement windows.
• D) None of these answers are correct.

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Definitions:

Oceanic Plateau

Underwater volcanic regions characterized by flat-topped mountains or plateaus, resulting from extensive eruptions of basaltic lava.

Island Arc

A curved chain of volcanic islands located along a subduction zone, formed by the rising magma from the descending tectonic plate.

Terranes

Distinct pieces of the crust that have been attached to a continent but originated elsewhere.

Sedimentary Unit

A sedimentary unit is a distinct layer of sedimentary rock with identifiable characteristics and depositional history, making it recognizable and distinguishable from other layers.