Figure 4-21 Jones Manufacturing Uses an Activity-Based Costing System

question 86

Multiple Choice

Figure 4-21 Jones Manufacturing uses an activity-based costing system.The company produces Model X and Model Y.Information relating to the two products is as follows:
The following overhead costs are reported for the following activities of the production process:
Jones manufacturing has used activity based costing to assign costs to Models X and Y as given in the table below:
Jones Manufacturing wants to implement an approximately relevant ABC system by using the two most expensive activities for cost assignment.
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Refer to Figure 4-21.Using ABC as the benchmark, What is the percentage error in the cost assigned to Model Y using the approximately relevant ABC approach? (round to 4 decimal places)

• A) 0.25%
• B) 0.12%
• C) 1.2%
• D) 2.5%

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Definitions:

Minimize Occurrence

Efforts or measures taken to reduce the frequency or likelihood of an event or condition happening.

Collaboration

The action of working with someone to produce or create something.

Win-Win Solution

An outcome of a negotiation where all parties feel they have achieved a satisfactory resolution.

Miscommunication

A failure to convey or understand information accurately, leading to misunderstandings or confusion.