Sanford Tools Produces a Variety of Scissors and Other Cutting

question 24

Multiple Choice

Sanford Tools produces a variety of scissors and other cutting instruments at its Birmingham manufacturing plant.The plant is highly automated and uses an activity-based costing system to allocate overhead costs to its various product lines.The 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 a pipe-cutting tool required 400 labor hours and 10 setups,consumed 30% of the product sustaining activities,and resulted in an overhead allocation of $15,400.What amount of batch-level overhead cost was expected during the period?

• A) $24,000
• B) $2,400
• C) $12,500
• D) None of these answers is correct.

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Definitions:

Inferential Statistics

A branch of statistics that uses a sample of data to make generalizations or predictions about a larger population.

Correlation

A statistical measure that expresses the extent to which two variables change together, indicating the strength and direction of their relationship.

Descriptive Statistics

Statistical methods that summarize and organize the characteristics of a set of data in order to give a clear overview without drawing conclusions beyond the data itself.

Statistical Significance

The likelihood that a relationship between two or more variables is caused by something other than random chance.