XYZ Co. uses a 5,000 square foot factory space that it rents for $3,500 a month for all its manufacturing activities. The company has decided to switch to an activity-based costing system, and has identified its activities as follows: Preparation and Setup, Machining, Finishing, and Quality Control. 500 square feet of the factory are used for machining, while 2,000 square feet (each) are used for Preparation and Setup and Quality Control. Finishing uses 500 square feet. When assigning indirect costs to each activity, how much factory rent should be assigned to the Quality Control cost pool? a. None of the given answer is correct. b. $1,400 O C. $300 d. $1,200 O e. $350
XYZ Co. uses a 5,000 square foot factory space that it rents for $3,500 a month for all its manufacturing activities. The company has decided to switch to an activity-based costing system, and has identified its activities as follows: Preparation and Setup, Machining, Finishing, and Quality Control. 500 square feet of the factory are used for machining, while 2,000 square feet (each) are used for Preparation and Setup and Quality Control. Finishing uses 500 square feet. When assigning indirect costs to each activity, how much factory rent should be assigned to the Quality Control cost pool? a. None of the given answer is correct. b. $1,400 O C. $300 d. $1,200 O e. $350
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:XYZ Co. uses a 5,000 square foot factory space that it rents for $3,500 a month for all its
manufacturing activities. The company has decided to switch to an activity-based costing system,
and has identified its activities as follows: Preparation and Setup, Machining, Finishing, and Quality
Control. 500 square feet of the factory are used for machining, while 2,000 square feet (each) are
used for Preparation and Setup and Quality Control. Finishing uses 500 square feet. When assigning
indirect costs to each activity, how much factory rent should be assigned to the Quality Control cost
pool?
O a. None of the given answer is correct.
O b. $1,400
C. $300
$1,200
e. $350
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