Jiminez Company paid its annual property tax of $12,400 on its manufacturing facility in January. The company expects to make 4,000 units of product during the year. During January, 700 units of product were produced. Based on this information: (Do not round intermediate calculations.)
A) $2,170 of the property tax cost should be allocated to the January production.
B) $1,033 of the property tax cost should be allocated to the January production.
C) $3,100 of the property tax cost should be assigned to the January production.
D) $12,400 of the property tax cost should be allocated to the January production.

Question

Quizplus · Accepted Answer

The property tax is a fixed cost and should be allocated based on the number of units produced. The cost per unit is $12,400 / 4,000 units = $3.10 per unit. For January, 700 units were produced, so the cost allocated is 700 units * $3.10 = $2,170.

Jiminez Company Paid Its Annual Property Tax of $12,400 on Its