Use the following information to answer question 5 New West Chemicals Ltd. engineers industrial cleaners. The two major chemicals that it produces are MLX and XLZ. The company uses an activity-based costing system with three cost pools. Below are the budgeted costs and activity levels for the year: Process line costs of $1,248,000 consist of all costs required to maintain and run the equipment used to produce the chemicals. New West uses total machine hours for al equipment on the line as the cost driver. Total machine hours for the year were 12,000 Each production run for the company required between two and four hours to set up the process flow. The total cost for the year was $1,092,000, and total setup hours were 800 A research and development (R&D) team of chemical engineers was on staff to ensure that the process was streamlined and within government guidelines. The cost pool consisted of employee salaries, equipment and testing laboratory costs. Total cost for the year was $980,000, which was applied to product lines based on 2,500 hours of R&D time The following activities occurred for the year for each product: MLX 100,000 1,000 36 XLZ Total litres produced Litres per batch Process machine hours per batch Setup hours per batch Research and development hours 75,000 500 56 4 1,000 1,500 Total direct costs were $450,000 for MLX and $600,000 for XLZ. 5. New West's executive team wants to manage its chemical production activities. Which of the following activity-based management (ABM) initiatives focuses on strategic ABM? a) The chemical engineers have introduced a new machine into the process that reduces b) Management is considering changing the product mix to focus on the product that is C) Based on their knowledge of the setup time, management is considering increasing d) Management is considering moving the receiving dock closer to the production area the production run time more profitable the number of litres produced in each production run to reduce the amount of movement of raw materials to the production line Use the following information to answer question 5 New West Chemicals Ltd. engineers industrial cleaners. The two major chemicals that it produces are MLX and XLZ. The company uses an activity-based costing system with three cost pools. Below are the budgeted costs and activity levels for the year: Process line costs of $1,248,000 consist of all costs required to maintain and run the equipment used to produce the chemicals. New West uses total machine hours for al equipment on the line as the cost driver. Total machine hours for the year were 12,000 Each production run for the company required between two and four hours to set up the process flow. The total cost for the year was $1,092,000, and total setup hours were 800 A research and development (R&D) team of chemical engineers was on staff to ensure that the process was streamlined and within government guidelines. The cost pool consisted of employee salaries, equipment and testing laboratory costs. Total cost for the year was $980,000, which was applied to product lines based on 2,500 hours of R&D time The following activities occurred for the year for each product: MLX 100,000 1,000 36 XLZ Total litres produced Litres per batch Process machine hours per batch Setup hours per batch Research and development hours 75,000 500 56 4 1,000 1,500 Total direct costs were $450,000 for MLX and $600,000 for XLZ. 5. New West's executive team wants to manage its chemical production activities. Which of the following activity-based management (ABM) initiatives focuses on strategic ABM? a) The chemical engineers have introduced a new machine into the process that reduces b) Management is considering changing the product mix to focus on the product that is C) Based on their knowledge of the setup time, management is considering increasing d) Management is considering moving the receiving dock closer to the production area the production run time more profitable the number of litres produced in each production run to reduce the amount of movement of raw materials to the production line