1. (TCO 1) The average cost data are for In-Sync Fixtures Company’s (a retailer) only two product lines, Marblette and Italian Marble.
Marblette Italian Marble
Purchase volume 20,000 1,000
Purchase cost per unit $50 $250
Shipments received 12 12
Hours used per shipment * 5 3
* These data were accumulated after a careful activity analysis.
Currently, In-Sync Fixtures uses a traditional costing system with indirect costs allocated using purchased cost of goods as a basis. In-Sync Fixtures is considering refining the allocation of its receiving costs of $40,000. It realizes that the Italian Marble is heavier and requires more care than the Marblette but that the Marblette comes in larger volume.
Which statement can be made using the results of the activity analysis performed by In-Sync Fixtures?
(Points : 3)
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