Sleepo Ltd Has Been Manufacturing Only One Type of Alarm

question 90

Multiple Choice

Sleepo Ltd has been manufacturing only one type of alarm clock,the PlainSnooze model.The company is considering developing some modifications to make another,more advanced model.Two options are available: the ToughSnooze and the MusicSnooze.Both ToughSnooze and MusicSnooze will start with the same processes as the PlainSnooze model,but with additional advanced functions.ToughSnooze has a voice activated snooze function,as well as an 'indestructible' aluminium casing,created for people who throw their alarm clocks around.The MusicSnooze also has a voice activated snooze function,but instead of the tough aluminium casing,it has a 'music choice' function.In choosing between making the ToughSnooze or the MusicSnooze,which of the following costs are relevant?
I The cost of building the PlainSnooze model
Ii) The cost of building a voice activated snooze function.iii The cost of building an "indestructible" aluminium cover.iv The cost of building "music choice" function.

• A) i,ii,iii and iv
• B) ii and iii
• C) ii,iii and iv
• D) iii and iv

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Definitions:

Molding Department

A specialized section within a manufacturing plant where raw materials are shaped into components through various molding processes.

Process Cost Summary

A report detailing the total costs associated with the production process, including materials, labor, and overhead expenses, over a specific period.

Equivalent Units

A concept used in cost accounting to indicate a quantity of finished goods that could have been produced given the amount of resources actually consumed during a period.

Managerial Accounting

The process of identifying, measuring, analyzing, interpreting, and communicating financial information to managers for the pursuit of an organization's goals.