Markham Company Makes Two Products: Basic Product and Deluxe Product

question 85

Multiple Choice

Markham Company makes two products: Basic Product and Deluxe Product.Annual production and sales are 1,700 units of Basic Product and 1,100 units of Deluxe Product.The company has traditionally used direct labor-hours as the basis for applying all manufacturing overhead to products.Basic Product requires 0.3 direct labor hours per unit and Deluxe Product requires 0.6 direct labor hours per unit.The total estimated overhead for next period is $98,785.The company is considering switching to an activity-based costing system for the purpose of computing unit product costs for external reports.The new activity-based costing system would have three overhead activity cost pools-Activity 1,Activity 2,and General Factory-with estimated overhead costs and expected activity as follows:

The overhead cost per unit of Deluxe Product under the traditional costing system is closest to:

• A) $50.66.
• B) $5.49.
• C) $26.09.
• D) $11.45.

---

Definitions:

FIFRA

The Federal Insecticide, Fungicide, and Rodenticide Act, which oversees the registration, distribution, sale, and use of pesticides in the U.S.

Unreasonable Risks

Unreasonable risks involve situations or actions that pose a high likelihood of harm or loss that are not justifiable, especially in the context of product safety or professional duties.

Human Health

A state of complete physical, mental, and social well-being and not merely the absence of disease or infirmity.

Pesticide

Chemical or biological agents used to control pests, diseases, or weeds harmful to plants, animals, or humans.