HiTech Products Manufactures Three Types of Remote-Control Devices: Economy, Standard

question 8

Multiple Choice

HiTech Products manufactures three types of remote-control devices: Economy, Standard, and Deluxe. The company, which uses activity-based costing, has identified five activities (and related cost drivers) . Each activity, its budgeted cost, and related cost driver is identified below. $\begin{array}{lrl}\text { Activity } & \text { Cost } & \text { Cost Driver }\\\text { Material handling } & \$ 225,000 & \text { Number of parts } \\\text { Material insertion } & 2,475,000 & \text { Number of parts } \\\text { Automated machinery } & 840,000 & \text { Machine hours } \\\text { Finishing } & 170,000 & \text { Direct labor hour } \\\text { Packaging } & 170,000 & \text { Orders shipped }\\\text { Total }&\$3,880,000\end{array}$ The following information pertains to the three product lines for next year: $\begin{array}{lrrr}&\text { Economy }&\text { Standard}&\text { Deluxe }\\\text { Units to be produced } & 10,000 & 5,000 & 2,000 \\\text { Orders to be shipped } & 1,000 & 500 & 200 \\\text { Number of parts per unit } & 10 & 15 & 25 \\\text { Machine hours per unit } & 1 & 3 & 5 \\\text { Labor hours per unit } & 2 & 2 & 2\end{array}$
What is HiTech's pool rate for the automated machinery activity?

• A) $24.00 per machine hour.
• B) $24.50 per labor hour.
• C) $49.42 per unit.
• D) $50.00 per machine hour.
• E) None of the other answers is correct.

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Definitions:

Merit Pay Plan

A compensation strategy where employees are rewarded based on their performance and achievements, encouraging higher levels of effort and productivity.

Individual Performance

The level of efficiency and effectiveness with which an individual accomplishes their job-related tasks, goals, and responsibilities.

Team Basis

The foundation or principle of working in groups composed of individuals who collaborate to achieve a common goal or task.

Supervisory Ratings

Assessments made by supervisors regarding the performance and competencies of their direct reports, often used in performance evaluations.