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Cooper's Bags Company manufactures cloth grocery bags to be sold to grocery stores and other retailers. Cooper's Bags Company sells the bags in cases of
Cooper's Bags Company manufactures cloth grocery bags to be sold to grocery stores and other retailers. Cooper's Bags Company sells the bags in cases of 1,700 bags. The bags come in three sizes: Large, Medium, and Small. Currently, Cooper's Bags Company uses a single plantwide overhead rate to allocate its $7,560,000 of annual manufacturing overhead. Of this amount, $2,260,000 is associated with the Large Bag line, $3,411,000 is associated with the Medium Bag line, and $1,889,000 is associated with the Small Bag line. Cooper's Bags Company is currently running a total of 37,000 machine hours: 14,000 in the Large Bag line, 15,100 in the Medium Bag line, and 7,900 in the Small Bag line. Cooper's Bags Company uses machine hours as the cost driver for manufacturing overhead costs. Which product line(s) have been overcosted or undercosted by using the plantwide manufacturing overhead rate? A. Large, Medium, and Small Bags have all been overcosted. B. Large Bags has been overcosted; Medium and Small have been undercosted. C. Large, Medium, and Small Bags have all been undercosted. D. Large Bags has been undercosted; Medium and Small have been overcosted. Dawn Corp analyzed several potential allocation bases that drives material handling costs and finds that number of parts moved has a correlation coefficient of 0.96 while time spent moving parts has a correlation coefficient of 0.45. Based on this analysis, Dawn Corp should use which allocation base? A. Either allocation base can be used because they are both greater than zero which indicates a great relationship in variables. B. Number of parts moved. C. Further analysis needs to be run as neither of these are close enough to zero, which would indicate a perfect relationship among variables. OD. Time spent moving parts
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