Bates Company Makes Two Products

question 84

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 company-wide 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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Ecological Approach

A framework or perspective that emphasizes the interactive relationship between organisms and their environments.

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