Figure 4-8 Tandem Company Manufactures Two Products (D and F)

question 15

Multiple Choice

Figure 4-8 Tandem Company manufactures two products (D and F) . The overhead costs ($84,000) have been divided into three cost pools that use the following activity drivers:
Refer for Figure 4-8. What is the allocation rate per packing order using activity-based costing?

• A) $18,750
• B) $ 75
• C) $ 1,875
• D) $ 250

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Definitions:

Substitution Effect

The change in the quantity demanded of a good that results from a change in price, making the good more or less expensive relative to other goods.

Wage Increase

An upward adjustment in the amount of money that workers are paid per hour, day, or work performed.

Labor Supply

The total hours that workers wish to work at a given wage rate.

Leisure

Time free from work or duties, which can be used for relaxation, recreation, or personal activities that one enjoys.