Riverside Florists Uses an Activity-Based Costing System to Compute the Cost

question 20

Multiple Choice

Riverside Florists uses an activity-based costing system to compute the cost of making floral bouquets and delivering the bouquets to its commercial customers. Company personnel who earn $180,000 typically perform both tasks; other firm-wide overhead is expected to total $70,000. These costs are allocated as follows: $\begin{array}{llll}&\text { Bouquet }\\&\text { Production }&\text {Delivery }&\text {Other }\\\text { Wages and salaries } & 60 \% & 30 \% & 10 \% \\\text { Other overhead } & 50 \% & 35 \% & 15 \%\end{array}$ Riverside anticipates making 20,000 bouquets and 4,000 deliveries in the upcoming year.
The cost of wages and salaries and other overhead that would be charged to each delivery is closest to:

• A) $19.63.
• B) $20.31.
• C) $26.75.
• D) $40.63.
• E) None of the other answers is correct.

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Definitions:

Tidal Volume (TV)

The amount of air that is inhaled or exhaled during normal breathing at rest.

Inspiratory Capacity (IC)

The maximum volume of air that can be inhaled after a normal exhalation, measured to assess lung function.

Spirometer

A device used to measure the volume of air inhaled and exhaled by the lungs.

Total Lung Capacity (TLC)

The maximum amount of air the lungs can contain, typically measured after a maximal inhalation effort.