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

question 1

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. Under this new approach using consumption ratios for labor related and batch inspections, what set of equations would be used to create equally accurate reduced ABC allocation rates (where a = labor hours and b = batch inspections) ? (round to 5 decimal places)

• A) 0.40 = 0.8a + 0.75b 0.60 = 0.12a + 0.85b
• B) 0.41 = 0.4a + 0.41667b 0.59 = 0.6a + 0.58333b
• C) 0.50 = 0.4a + 0.6b 0.50 = 0.6a + 0.4b
• D) 0.44 = 0.8a + 0.75b 0.56 = 0.12a + 0.85b