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, what cost would be assigned to materials handling?
A) 0
B) $40,000
C) $140,000
D) $290,000

Question

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, what cost would be assigned to materials handling?
A) 0 
B) $40,000 
C) $140,000 
D) $290,000

Quizplus · Accepted Answer

Materials handling is now included in the overhead rate, so it would not be assigned a separate cost.

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