Franklin Manufacturing Manufactures Two Models of Windows, Bay Windows and Casement

Multiple Choice

Franklin Manufacturing manufactures two models of windows, bay windows and casement windows. Franklin uses an activity based costing system. The following information about the activities used to produce the company's products has been provided.If bay windows and casement windows require the same amount of direct labor, using labor hours as the allocation base for facility-level costs would: Produce
Agree. Change made. JMF
$\begin{array} { | l | c |r | c | c | } \hline { \text { Category } } & { \text { Estimated Cost } } & \text { Cost Driver } & \text { Bay Windows } & \text { Casement } \\\hline \text { Unit-level } & \$ 125,000 & \text { Labor hours } & 750 & 500 \\\hline \text { Batch-level } & \$ 75,000 & \text { Inspections } & 30 & 20 \\\hline \text { Product-level } & \$ 35,000 & \text { Storage Space } & 3500 \text { sq feet } & 2100 \text { sq feet } \\\hline \text { Facility-level } & \$ 165,000 & \text { Machine hours } & 9,000 & 6,000 \\\hline\end{array}$

A) undercost the casement windows.
B) overcost the bay windows.
C) undercost both the bay windows and casement windows.
D) None of these answers is correct. Produce
Agree. Change made. JMF