1. Brannock Company makes steel and titanium handle bars for bicycles. It requires aproximately 1 hour of labor to make one handle bar of either type. During the most recent accounting period, the company made 8,000 steel bars and 2,000 titanium bars. Setup costs amounted to $48,000 for the 24 batches (i.e., 12 of each type) of bars produced during the period. If activity-based costing is used to allocate overhead costs to the two products, the amount of setup cost assigned to the titanium bars will be: A. $9,600. B. $24,000. C. $38,400. D. $48,000. 2. Aaron Company makes two products. Product X requires 4,000 hours of labor, and Product Y requires 6,000 hours of labor. Aaron undertook an automation program that reduced the consumption of labor required by Product Y to only 2,000 hours of labor. Product X was not affected by the automation process. Overhead cost prior to the automation totaled $10,000. After automation, overhead cost amounted to $24,000. Assuming Aaron uses direct labor hours as a company-wide allocation base before and after the automation, the amount of overhead cost allocated to: A. Product X would be $4,000 prior to automation and $16,000 after automation. B. Product X would be $6,000 prior to automation and $8,000 after automation. C. Product Y would be $8,000 prior to automation and $8,000 after automation. D. Product Y would be $2,000 prior to automation and $12,000 after automation. 3. The Ted Company is considering eliminating the following product line: Product AXP Sales $40,000 Less variable costs: Raw materials 25,000 Direct labor 5,000 Contribution margin $10,000 Less fixed costs: Production costs allocated to products 15,000 Profit (loss) $(5,000) What amount of cost is avoidable if Ted outsources production of this product? A. 5,000 B. $25,000 C. $30,000 D. $45,000 4. All of the following are internal failure costs except: A. Scrap costs. B. Rework costs. C. Downtime costs. D. Inspection costs.