Franklin Manufacturing manufactures two models of windows,bay windows and casement windows.Franklin uses an activity based costing system.The following information about the activities used to product the company's products has been provided. Produce
Agree.Change made.JMF $\begin{array}{|l|c|c|c|c|}
\hline {\text { Category }} & {\text { Estimated Cost }} & \text { Cost Driver } & \text { Bay Windows } & \text { Casement } \
\hline \text { Unit-level } & \$ 125,000 & \text { Labor hours } & 750 & 500 \
\hline \text { Batch-level } & \$ 75,000 & \text { Inspections } & 30 & 20 \
\hline \text { Product-level } & \$ 35,000 & \text { Storage Space } & 3500 \text { sq feet } & 2100 \text { sq feet } \
\hline \text { Facility-level } & \$ 165,000 & \text { Machine hours } & 9,000 & 6,000 \
\hline
\end{array}$ Which of the following best describes the impact of undercosting in the allocation of production costs?
I don't think this info is necessary for the question.Perhaps add to the question something like: impact of undercosting in the allocation of production costs.
Agree.Change made.JMF
A) This is a goal of all companies because undercosting.Undercosting all products allows for larger profit margins.
B) Companies will use target pricing to undercost products.
C) Undercosting some products will lead to overcosting other products,which may then become overpriced and lose market share.
D) Undercosting some products can lead to overcosting other products,which is acceptable because it all balances out in the long run.
Produce
Agree.Change made.JMF
I don't think this info is necessary for the question.Perhaps add to the question something like: impact of undercosting in the allocation of production costs.
Agree.Change made.JMF

Question

Franklin Manufacturing manufactures two models of windows,bay windows and casement windows.Franklin uses an activity based costing system.The following information about the activities used to product the company's products has been provided. Produce
Agree.Change made.JMF $\begin{array}{|l|c|c|c|c|}
\hline {\text { Category }} & {\text { Estimated Cost }} & \text { Cost Driver } & \text { Bay Windows } & \text { Casement } \
\hline \text { Unit-level } & \$  125,000 & \text { Labor hours } & 750 & 500 \
\hline \text { Batch-level } & \$  75,000 & \text { Inspections } & 30 & 20 \
\hline \text { Product-level } & \$  35,000 & \text { Storage Space } & 3500 \text { sq feet } & 2100 \text { sq feet } \
\hline \text { Facility-level } & \$  165,000 & \text { Machine hours } & 9,000 & 6,000 \
\hline
\end{array}$ Which of the following best describes the impact of undercosting in the allocation of production costs?
I don't think this info is necessary for the question.Perhaps add to the question something like: impact of undercosting in the allocation of production costs.
Agree.Change made.JMF
A) This is a goal of all companies because undercosting.Undercosting all products allows for larger profit margins.
B) Companies will use target pricing to undercost products.
C) Undercosting some products will lead to overcosting other products,which may then become overpriced and lose market share.
D) Undercosting some products can lead to overcosting other products,which is acceptable because it all balances out in the long run.
Produce
Agree.Change made.JMF
I don't think this info is necessary for the question.Perhaps add to the question something like: impact of undercosting in the allocation of production costs.
Agree.Change made.JMF

Quizplus · Accepted Answer

Undercosting of some products will result in overcosting of other products, which can lead to those products becoming overpriced and potentially losing market share. This can have a negative impact on the company's overall profitability and competitiveness in the market. It is important to accurately allocate production costs to each product to ensure that they are priced appropriately and remain competitive.

Franklin Manufacturing Manufactures Two Models of Windows,bay Windows and Casement