41. Alphabet Corporation is preparing its annual budget. As part of its analysis of the contribution of individual products to overall profitability, the controller estimates the amount of overhead that should be assigned to the individual product lines, Budgeted inspection costs are $15,000. Additional information is as follows: Small Pumps Large Pumps Units inspected 150 150 Hours spent inspecting 2.5 17.5 Direct labour hours per unit 2.5 2.5 Under a traditional costing system that assigns overhead based on units inspected, the inspection costs allocated to one small pump would be: a $2.50 b. $50 c. $300 d. $20 42. According to agency theory, under what circumstances could companies eliminate agency costs? a. If their shares are not traded on the stock exchange b. If bonuses are based on financial performance c. If they publish audited financial statements d. Organisations cannot eliminate agency cost 45. Happy Faces Ltd had the following results during the most recent year: Sales $600,000; Residual income $5,000; investment turnover 2.5; and a required rate of return of 15%. The capital investment was: a. $72,000 b $150,000 c. $1,500,000 d. $240,000 41. Alphabet Corporation is preparing its annual budget. As part of its analysis of the contribution of individual products to overall profitability, the controller estimates the amount of overhead that should be assigned to the individual product lines, Budgeted inspection costs are $15,000. Additional information is as follows: Small Pumps Large Pumps Units inspected 150 150 Hours spent inspecting 2.5 17.5 Direct labour hours per unit 2.5 2.5 Under a traditional costing system that assigns overhead based on units inspected, the inspection costs allocated to one small pump would be: a $2.50 b. $50 c. $300 d. $20 42. According to agency theory, under what circumstances could companies eliminate agency costs? a. If their shares are not traded on the stock exchange b. If bonuses are based on financial performance c. If they publish audited financial statements d. Organisations cannot eliminate agency cost 45. Happy Faces Ltd had the following results during the most recent year: Sales $600,000; Residual income $5,000; investment turnover 2.5; and a required rate of return of 15%. The capital investment was: a. $72,000 b $150,000 c. $1,500,000 d. $240,000