Reference: 17_05
Assume That a Pet Food Manufacturer Is Considering

Multiple Choice

Reference: 17_05
Assume that a pet food manufacturer is considering adding two types of pet food to its existing product line. Research had determined that good demand exists for dog food in 40-pound bags and cat food in 1/2pound cans.
The company identified the following partial list of activities, costs, and activity drivers expected for the next year:
$$\begin{array} { | l | c | l | } \hline \text { Activity } & \text { Expected Costs } & { \text { Cost Driver } } \\\hline \text { Handling materials } & \$ 105,000 & \text { Number of batches made } \\\hline \text { Storage costs } & \$ 820,000 & \text { Weight of Finished product } \\\hline\end{array}$$ $$\begin{array} { | l | c | c | } \hline & \text { Dog Food } & \text { Cat Food } \\\hline \text { Production volume } & 100,000\text { units } & 200,000 \text { units } \\\hline \text { Batches made } & \text { 200 batches } & 150 \text { batches } \\\hline\end{array}$$
-Refer to the data in the preceding tables.How much overhead cost will be assigned to each product line using activity-based costing (ABC) ?

A) Dog food: $462,500; cat food: $462,500.
B) Dog food: $860,000; cat food: $65,000.
C) Dog food: $60,000; cat food: $45,000.
D) Dog food: $800,000; cat food: $20,000.
E) Dog food: $320; cat food: $320.