Question: Note: Quantitative values in the question may differ from those in other similar questions on this quiz and on practice quizzes. Guess Klein produces designer
Note: Quantitative values in the question may differ from those in other similar questions on this quiz and on practice quizzes.
Guess Klein produces designer clothing such as T-shirts and jeans from fabric purchased from several nearby factories. The company's factory has two departments, Cutting and Sewing. The Cutting department, which cuts the garments from patterns, is a machine-intensive operation. It takes three times longer to cut and sew jeans compared to T-shirts. The Sewing department stitches the cut fabric, sews zippers and buttons and does quality checking. While stitching is highly automated, sewing zippers and buttons and performing quality checks is manual.
The company has decided to redo their accounting system and move to an activity based cost system. Table 1 shows the five activity cost pools which include all of the company's direct labor and manufacturing overhead costs. It also shows the cost drivers for each pool. Table 2 shows the cost drivers consumed by the two products. Table 3 shows budgeted product data for Jeans and T-shirts.
Table 1: Guess Klein Activity Cost Pools
Activity
Cost
Cost Driver
Maintain Equipment
$56,000
Machine Hours
Cut
288,000
Number of cuts
Sew
212,000
Number of sides
Button/Zipper
95,500
Labor Hours
Check/Move Goods
45,500
Number of moves
Total
$685,000
Table 2: Guess Klein Activity Cost Drivers
Driver
Jeans
T-shirts
Total
Total Machine Hours
3,500
1,500
5,000
Numbers of cuts per garment
4
1
300,000
Number of sides per garment
4
2
400.000
Total Labor Hours
3,600
0
3,600
Total Number of Moves
5,000
10,000
15,000
Table 3: Budgeted Product Data for Guess Klein Garments
Product
Jeans
T-shirts
Total
Direct Materials
125,000
75,000
200,000
Direct Labor (Allocated on garments produced)
65,000
130,000
195,000
Machine Hours
3,000
1,000
4,000
Garments produced
50,000
100,000
150,000
Using ABC, how much of the Check/Move Goods activity cost would be applied to the T-shirts?
Group of answer choices
$15,167
None of the other three answers is correct
$30,333
$0.15
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