7 Number of setups and number of components are identified as activity cost drivers for overhead Assuming an activity based costing system is used, what is the total amount of overhead cost assigned to the deluxe model A) $25,500 B) $25,000 C) $24,000 D) $12,500 8, Racer X hopes to reduce the overhead costs associated with the setups in the long run i) By reducing the cost of performing each set up by 20 and ii) By reducing the setups for standard from 15 to 13 and for deluxe from 35 to 32 What are the expected savings $4,750 $1,500 $4,200 $1,200 Answer questions 6, 7 and 8 using the information below Racer X Corporation manufactures two models of motorized go carts, a standard and a deluxe model The following activity and cost information has been compiled Number of Number of Number of Product Setups Components Direct Labor Hours Standard 750 Deluxe 35 15 500 Overhead costs $15,000 $25,000 15 10 6) Assume a traditional costing system applies the $40,000 of overhead costs based on direct labor hours What is the total amount of overhead cost assigned to the deluxe model A) $16,000 B) $24,000 C) $25,000 D) $15,000

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7. Number of setups and number of components are identified as activity-cost drivers for overhead. Assuming an activity-based costing system is used, what is the

image text in transcribed 7. Number of setups and number of components are identified as activity-cost drivers for overhead. Assuming an activity-based costing system is used, what is the total amount of overhead cost assigned to the deluxe model?

A) $25,500

B) $25,000

C) $24,000

D) $12,500

8, Racer X hopes to reduce the overhead costs associated with the setups in the long run:

i) By reducing the cost of performing each set up by 20% and

ii) By reducing the setups for standard from 15 to 13 and for deluxe from 35 to 32.

What are the expected savings?

$4,750
$1,500
$4,200
$1,200

Answer questions 6, 7 and 8 using the information below: Racer X Corporation manufactures two models of motorized go-carts, a standard and a deluxe model. The following activity and cost information has been compiled: Number of Number of Number of Product Setups Components Direct Labor Hours Standard 750 Deluxe 35 15 500 Overhead costs $15,000 $25,000 15 10 6) Assume a traditional costing system applies the $40,000 of overhead costs based on direct labor hours. What is the total amount of overhead cost assigned to the deluxe model? A) $16,000 B) $24,000 C) $25,000 D) $15,000