Figure 4-21 Appleby Manufacturing Uses an Activity-Based Costing System. the Company Produces

question 36

Multiple Choice

Figure 4-21
Appleby Manufacturing uses an activity-based costing system. The company produces Model F and Model G. Information relating to the two products is as follows:
The following overhead costs are reported for the following activities of the production process:
Jones manufacturing has used activity based costing to assign costs to Models F and G as given in the table below:
Appleby Manufacturing wants to implement an approximately relevant ABC system by using the two most expensive activities for cost assignment.
-Refer to Figure 4-21. Using ABC as the benchmark, what is the percentage error in the cost assigned to Model G using the approximately relevant ABC approach? (round to 4 decimal places)

• A) 0.25%
• B) 0.12%
• C) 1.2%
• D) 2.5%

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Definitions:

Profit Maximized

The point at which a firm achieves the highest possible profit, typically by adjusting output levels or prices.

Total Revenue

The total amount of money that is brought in by sales of goods or services.

Total Cost

The complete cost of production, encompassing both fixed and variable costs.

Marginal Revenue

The incremental revenue acquired by a business upon selling one more unit of a good or service.