Figure 12-3
The Lee Company must choose between two mutually exclusive alternatives. With alternative 1 an inferior product will be marketed that is best suited to low levels of demand whereas alternative 2 is a superior product that is best suited to high levels of demand. There are only two possible levels of demand - high and low and the probabilities of each event occurring is 0.5. The predicted profits for each alterative are:
-Riley, SA., has identified the following overhead costs and activity drivers for next year: The following are two of the jobs completed during the year: The company's normal activity is 4,000 direct labour hours. If the activity drivers are used to allocate overhead costs, the unit cost (rounded to two decimal places) for Job BB would be
A) £21.40.
B) £26.56.
C) £26.95.
D) £27.03.

Question

Figure 12-3
The Lee Company must choose between two mutually exclusive alternatives. With alternative 1 an inferior product will be marketed that is best suited to low levels of demand whereas alternative 2 is a superior product that is best suited to high levels of demand. There are only two possible levels of demand - high and low and the probabilities of each event occurring is 0.5. The predicted profits for each alterative are: 
-Riley, SA., has identified the following overhead costs and activity drivers for next year:  The following are two of the jobs completed during the year:  The company's normal activity is 4,000 direct labour hours. If the activity drivers are used to allocate overhead costs, the unit cost (rounded to two decimal places) for Job BB would be
A) £21.40. 
B) £26.56. 
C) £26.95. 
D) £27.03.

Quizplus · Accepted Answer

The Answer of Figure 12-3
The Lee Company must choose between two mutually exclusive alternatives. With alternative 1 an inferior product will be marketed that is best suited to low levels of demand whereas alternative 2 is a superior product that is best suited to high levels of demand. There are only two possible levels of demand - high and low and the probabilities of each event occurring is 0.5. The predicted profits for each alterative are: 
-Riley, SA., has identified the following overhead costs and activity drivers for next year:  The following are two of the jobs completed during the year:  The company's normal activity is 4,000 direct labour hours. If the activity drivers are used to allocate overhead costs, the unit cost (rounded to two decimal places) for Job BB would be
A) £21.40. 
B) £26.56. 
C) £26.95. 
D) £27.03.

Figure 12-3 The Lee Company Must Choose Between Two Mutually Exclusive Alternatives