Allure Company Manufactures and Distributes Two Products,M and XY What Is the Total Overhead Allocated to Product M Using

question 108

Multiple Choice

Allure Company manufactures and distributes two products,M and XY.Overhead costs are currently allocated using the number of units produced as the allocation base.The controller has recommended changing to an activity-based costing (ABC) system.She has collected the following information:
$\begin{array}{|l|l|r|r|r|}\hline \text { Acturity } & \text { Cost Driser } & \text { Amount } & \text { M } & X Y \\\text { Production } & \text { Number of } & \$ 82,000 & 8 & 12 \\\text { setups } & \text { setups } & & & \\\hline \text { Material } & \text { Number of } & 48,000 & 56 & 24 \\\text { handling } & \text { parts } & & & \\\text { Packaging } & \text { Number of } & 130,000 & 80,000 & 50,000 \\\text { costs } & \text { units } & & & \\\hline &&\underline{\$260,000}&&\\\hline\end{array}$
What is the total overhead allocated to Product M using the current system?

• A) $113,600.
• B) $130,000.
• C) $146,400.
• D) $160,000.

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Definitions:

Future Value

The value of an investment at a specified date in the future that is equivalent in value to a specified sum today, after being compounded at a given interest rate.

Simple Interest

Interest calculated on the principal amount of a loan or deposit, without compounding.

Account Value

The total worth of a financial account, including cash, investment holdings, and any other assets minus liabilities.

Present Values

Present values represent the sum total of all future cash flows of an investment or project discounted back to their value today.