Figure 4-16 Samson Company Recently Installed an Activity-Based Relational Database. Using the Using

question 81

Multiple Choice

Figure 4-16
Samson Company recently installed an activity-based relational database. Using the information contained in the activity relational table, the following pool rates were computed:
$400 per purchase order
$24 per machine hour, Process 1
$30 per machine hour, Process 2
$80 per engineering hour
Two products are produced by Special Products: L and M. The plant has two manufacturing processes, Process 1 and Process 2. Other processes include engineering, product handling, and procurement. Product L goes through Process 1 while Product M goes through Process 2. The product relational table for Special Products is as follows:
Product L
Product M

-Refer to Figure 4-16. How much engineering overhead cost will be assigned to Product M using engineering hours?

• A) $100,000
• B) $120,000
• C) $2,000,000
• D) $801,000

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Definitions:

Implied Warranty of Merchantability

A legal assurance that goods sold meet minimum quality standards and are fit for the purpose sold.

Trade Usage

Established practices or patterns of behavior regularly observed and accepted in a particular industry.

Particular Purpose

A specific reason or function for which something is intended or used.

Merchantability

A guarantee that a product sold will meet reasonable expectations of quality and performance as implied by law.