Assume That the Oregon Ice Cream Company Is Considering the Costs

question 66

Multiple Choice

Assume that the Oregon Ice Cream Company is considering the costs of two of their product lines - ice cream sandwiches and dessert bars. The company identified the following partial list of activities, costs, and activity drivers expected for the next year.
$$\begin{array}{l}\begin{array} { | l | c | c | } \hline \text { Activity } & \text { Expected Costs } & \text { Cost Driver } \\\hline \text { Extrusion Costs } & \$ 637,500 & \text { Number batches made } \\\hline \text { Packaging Costs } & \$ 44,000 & \text { Number of units made } \\\hline\end{array}\\\\\begin{array} { | l | c | c | } \hline & \text { Ice Cream Sandwiches } & \text { Dessert Bars } \\\hline \text { Production volume } & 350,000 \text { units } & 200,000 \text { units } \\\hline \text { Batches made } & 400 \text { batches } & 350 \text { batches } \\\hline\end{array}\end{array}$$
-Refer to the data above. How much overhead cost will be assigned to the desert bar product line using activity-based costing (ABC) ?

• A) 340,750
• B) $247,818
• C) $16,000
• D) $297,500
• E) $313,500

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Definitions:

Benchmarking

The process of comparing business processes and performance metrics to industry bests or best practices from other companies.

Critical Success Factors

Essential conditions or variables that, when properly sustained, maintained, or managed, can have a significant impact on the success of a business or project.

Production Activities

Processes involved in the creation of goods and services, ranging from raw material procurement to the final manufacturing steps.

Financial Performance Measures

Metrics used to assess a company's financial health, including profitability, liquidity, and solvency ratios.