McArthur Company Has Gathered the Following Data Related to Its

question 107

Multiple Choice

McArthur Company has gathered the following data related to its production process of two of its products for the week ended April 30:
$$\begin{array} { | l | r | r | } \hline \text { Model } & \text { Item AB-200 } & \text { Item \#CA40 } \\ \text { Quantly procuced } & \mathbf { 6 0 } & \mathbf { 1 0 0 } \\\hline \text { Unit-level material cost } & \$ 42,000 & \$ 100,000 \\\hline \text { Variable conversion cost } & 72,000 & 300,000 \\\hline \text { Total drect costs } & \$ 114,000 & \$ 400,000 \\\hline \text { Indrect costs: } & & \\\text { Indirect manufacturing cost } & 163,200 & 272,000 \\\hline \text { Indirect operating cost } & \underline { 255,000 } & \underline { 425,000 } \\ \text { Total indirect costs } & \underline { 418,200 } & \underline {697,000} \\\hline \text { Total costs } & \underline { \$ 532,200 }& \underline { \$ 1,097,000} \\\hline\end{array}$$
The costs above that appear to be allocated rather than traced are:

• A) Unit level material costs.
• B) Variable conversion costs.
• C) Indirect production costs only.
• D) All indirect costs.

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Definitions:

Supply

The total amount of a product or service available for purchase at any given price level in a given market.

Market

A system where buyers and sellers interact to trade goods, services, and resources.

Productivity

The efficiency with which inputs, like labor and capital, are converted into outputs, typically measured as a ratio of output to input.

Percent

A part per hundred, a unit of measure used to express the fraction of a quantity relative to one hundred parts of the total.