Bristol Electronics Produces Wide Range of Electronic Products Data for 3 Products Only

question 65

Multiple Choice

Bristol Electronics produces wide range of electronic products. The company has a labour based costing system that was introduced in the 1970s and is now considering implementing an activity based costing (ABC) system. Managers are concerned about how they should compare the ABC data with the existing costing system.
Selected data from the management accounts for the year ending 31st December 2000
$$\begin{array} { | l | l | } \hline \text { Cost data } & \\\hline \text { Total manufacturing overhead for year } & £ 1,000,000 \\\hline \text { Total hours for year } & 60,000 \text { hours } \\\hline \text { Direct labour cost per hour } & £ 10 \\\hline\end{array}$$
Data for 3 products only
$$\begin{array} { | l | r | r | r | } \hline & \text { Product A } & \text { F roduct B } & \text { Product C } \\\hline \text { Annual production } & 1,000 \text { units } & 2,000 \text { units } & 5,000 \text { units } \\\hline \text { Material cost per unit } & £ 5.00 & £ 6.00 & £ 7.00 \\\hline \text { Direct labour hours per unit } & 1.00 & 1.50 & 0.50 \\\hline\end{array}$$ $$\begin{array} { | l | r | r | } \hline \text { ABC data for all products } & & \\\hline \text { Cost pool / driver } & \text { Annual costs (£s) } & \text { Annual volume } \\\hline \text { Number of set-ups } & 200,000 & 1,000 \\\hline \text { Inspection time (hours) } & 500,000 & 3,000 \\\hline \text { Machine maintenance (hours) } & 100,000 & 5,000 \\\hline \text { Number of purchases } & 100,000 & 500\\\hline \text { Number of shipments } & 100,000 & 500\\\hline &1,000,000\\\hline\end{array}$$
$$\begin{array} { | l | c | c | c | } \hline \text { ABC data 3 products } & \text { Froduct A } & \text { Froduct B } & \text { Froduct C } \\\hline \text { Number of set-ups } & 20 & 180 & 30 \\\hline \text { Inspection time (hours) } & 20 & 50 & 300 \\\hline \text { Machine maintenance (hours) } & 30 & 40 & 20 \\\hline \text { Number of purchases } & 3 & 4 & 5 \\\hline \text { Number of shipments } & 3 & 4 & 6 \\\hline\end{array}$$
-Determine the total overhead cost for product A using the using the activity based data

• A)£9,133
• B)£20,000
• C)£21,667
• D)£21,000

Understand the preferences and rights of preferred stock versus common stock.

Comprehend the roles and responsibilities of the board of directors and officers in a corporation.

Calculate key financial figures such as total paid-in capital and total stockholders' equity from given financial data.

Differentiate between the paid-in capital and retained earnings components of stockholders' equity.

---

Definitions:

Correlation

A statistical measure that describes the extent to which two variables change together, indicating the strength and direction of their relationship.

Randomly Selected Stocks

Shares from various companies chosen without any specific criteria or bias, often used for creating a diversified investment portfolio.

Market Risk

The risk of losses in investments due to factors that affect the entire market or economy.

CAPM (Capital Asset Pricing Model)

A financial model that describes the relationship between systematic risk and expected return for assets, particularly stocks.