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

question 124

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:
$\begin{array}{|l|l|r|r|r|}\hline \text { Acturity } & \text { Cost Driser } & \text { Amount } & \text { M } & \times Y \\\text { Production } & \text { Number of } & \$ 82,000 & 8 & 12 \\\text { setups } & \text { setups } & & & \\\hline \text { Material } & \text { Number of } & 48,000 & 56 & 24 \\\text { handling } & \text { parts } & & & \\\text { Packaging } & \text { Number of } & 130,000 & 80,000 & 50,000 \\\text { costs } & \text { units } & & & \\\hline&&\underline{\$260,000}&&\\\hline\end{array}$
What is the total overhead allocated to Product XY using the current system?

• A) $113,600.
• B) $100,000.
• C) $146,400.
• D) $160,000.

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Definitions:

Ordinary Course

Activities or transactions that are part of the regular, expected business operations of a company.

Insolvent Debtors

Individuals or businesses that are unable to meet their financial obligations or pay their debts as they become due.

Chattel Paper

A document or electronic record that evidences both a monetary obligation and a security interest in specific goods.

Right to Payment

A legal entitlement to receive money as a result of a contract or legal agreement.