Question

X-TREME Corporation has the following activities: creating bills of materials (BOM), studying manufacturing capabilities, improving manufacturing processes, training employees, and designing tooling. The general ledger accounts reveal the following expenditures for manufacturing engineering: $ 75,000 Salaries 40,000 Equipment 10,000 Supplies $125,000 Total The equipment is used for two activities: improving processes and designing tooling. Thirty-five percent of the equipment's time is used for improving processes and 65 percent is used for designing tools. The salaries are for two engineers. One is paid $50,000, while the other earns $25,000. The $50,000 engineer spends 40 percent of his time training employees in new processes and 60 percent of his time on improving processes. The remaining engineer spends equal time on all activities. Supplies are consumed in the following proportions: 25% Creating BOMS 10% Studying capabilities 20% Improving processes 25% Training employees 20% Designing tooling Refer to Figure 4-17. What is the cost assigned to the creating BOMS activity?

Answer 1

C. $7,500

Explanation:

The manufacturing engineering process involves several expenditures on several activities. the proportion of every expenditure spend on each type of activity is specified in the question. Let us firstly identify expenditure related to each activity.

After the analysis, we can conclude that cost assigned to creating BOM activity is $7,500.

Expenditure Amount Creating BOM % of time Amount Studying Capability % of time Amount Improving processes % of time Amount Training Employees % of time Amount Designing Tooling % of time Amount Salaries Engineer | $ 50,000.00 Engineer 11$ 25,000.00 60% $ 30,000.00 20% $ 5,000.00 40% $ 20,000.00 20% $ 5,000.00 20% $5,000.00 20% $5,000.00 20% $ 5,000.00 Equipment $ 40,000.00 35% $ 14,000.00 65% $ 26,000.00 Supplies $ 10,000.00 25% $2,500.00 10% $1,000.00 20% $ 2,000.00 25% $ 2,500.00 20% $ 2,000.00 Total Cost $ 1,25,000.00 $ 7,500.00 $6,000.00 $ 51,000.00 $ 27,500.00 $ 33,000.00