Answer the following questions using the information below:
Mayan Potters manufactures two sizes of ceramic paperweights, regular and jumbo. The following information applies to their expectations for the planning period:
Mayan Potters uses an ABC system and assigns overhead costs based on the overhead activity information provided above.
-During October, Mayan produced 700,000 regular ceramic paperweights and Mayan's production manager counted 2,000 orders; 1,000 maintenance-hours; 2,000 setups; and 2,000 inspections for the regular product line. For October, Mayan's controller assigned ________ indirect costs to the regular product line.
A)$43,000
B)$25,000
C)$34,000
D)None of these answers are correct.

Question

Answer the following questions using the information below:
Mayan Potters manufactures two sizes of ceramic paperweights, regular and jumbo. The following information applies to their expectations for the planning period:
   Mayan Potters uses an ABC system and assigns overhead costs based on the overhead activity information provided above.
-During October, Mayan produced 700,000 regular ceramic paperweights and Mayan's production manager counted 2,000 orders; 1,000 maintenance-hours; 2,000 setups; and 2,000 inspections for the regular product line. For October, Mayan's controller assigned ________ indirect costs to the regular product line.
A)$43,000 
B)$25,000 
C)$34,000 
D)None of these answers are correct.

Quizplus · Accepted Answer

Indirect costs assigned to the regular product line = (Orders + Maintenance-hours + Setups + Inspections) x Indirect cost per unit= (2,000 + 1,000 + 2,000 + 2,000) x $10= 7,000 x $10= $70,000Indirect cost per unit = Total indirect costs / Total units produced= $70,000 / 700,000 units= $0.10 per unitTherefore, indirect costs assigned to the regular product line = 700,000 units x $0.10 per unit= $70,000

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