Question
The following information is available for the Downtown Furniture Company which produces two types of tables. Oak Cherry Total Sales volume (units) 500 300 800
The following information is available for the Downtown Furniture Company which produces two types of tables.
|
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| Oak | Cherry | Total |
|
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| Sales volume (units) | 500 | 300 | 800 |
|
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| Revenue | $80,000 | $78,000 | $158,000 | |
|
| Variable Costs |
|
|
|
|
|
| Direct materials | $5,000 | $7,000 | $12,000 | |
|
| Direct labor | $17,000 | $22,000 | $39,000 |
|
|
| Contribution Margin | $58,000 | $49,000 | $107,000 | |
|
| Fixed Costs |
|
|
|
|
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| Manufacturing |
|
| $25,500 |
|
|
| Administrative |
|
| $31,000 |
|
|
| Profit Before Tax |
|
| $50,500 |
|
Management feels that the fixed manufacturing costs should be allocated based on direct labor costs and fixed administrative costs should be allocated based on units sold. The amount of fixed administrative costs which should be allocated to the Cherry tables is:
A.$15,500
B.$18,600
C.$31,000
D.$11,625
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