Bates Company Makes Two Products

question 50

Multiple Choice

Bates Company makes two products.Product X requires 6,000 hours of labor,and Product Y requires 4,000 hours of labor.Bates undertook an automation program that reduced the consumption of labor required by Product X to only 2,000 hours of labor.Product Y was not affected by the automation process.Overhead cost prior to the automation totaled $10,000.After automation,overhead cost amounted to $24,000.Assuming Bates uses direct labor hours as a companywide allocation base before and after the automation,the amount of overhead cost allocated to:

• A) Product X would be $4,000 prior to automation and $16,000 after automation.
• B) Product X would be $6,000 prior to automation and $16,000 after automation.
• C) Product Y would be $8,000 prior to automation and $8,000 after automation.
• D) Product Y would be $4,000 prior to automation and $16,000 after automation.

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Definitions:

Increasing Energy

Refers to the process where the energy levels within a system, object, or molecule rise, leading to higher activity or reactivity.

Electromagnetic Spectrum

The range of all types of electromagnetic radiation, including gamma rays, X-rays, ultraviolet light, visible light, infrared light, microwaves, and radio waves, each varying in wavelength and energy.

Electromagnetic Radiation

A form of energy that is propagated through space or matter, including radio waves, microwaves, infrared, visible light, ultraviolet, X-rays, and gamma rays.

Absorption

The process by which one substance takes up or takes in another substance, at the molecular or ionic level.