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 1,400 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 $7,663,000 of annual manufacturing overhead. Of this amount, $2,150,000 is associated with the Large Bag line, $3,415,000 is associated with the Medium Bag line, and $2,098,000 s associated with the Small Bag line. Cooper's Bags Company is currently running a total of 38,000 machine hours: 13,900 in the Large Bag line, 16,300 in the Medium Bag line, and 7,800 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? O A. Large Bags has been overcosted; Medium and Small have been undercosted. O B. Large, Medium, and Small Bags have all been undercosted. OC. Large Bags has been undercosted; Medium and Small have been overcosted. O D. Large, Medium, and Small Bags have all been overcosted.
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 1,400 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 $7,663,000 of annual manufacturing overhead. Of this amount, $2,150,000 is associated with the Large Bag line, $3,415,000 is associated with the Medium Bag line, and $2,098,000 s associated with the Small Bag line. Cooper's Bags Company is currently running a total of 38,000 machine hours: 13,900 in the Large Bag line, 16,300 in the Medium Bag line, and 7,800 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? O A. Large Bags has been overcosted; Medium and Small have been undercosted. O B. Large, Medium, and Small Bags have all been undercosted. OC. Large Bags has been undercosted; Medium and Small have been overcosted. O D. Large, Medium, and Small Bags have all been overcosted.
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter4: Activity-based Costing
Section: Chapter Questions
Problem 1PA: Gwinnett County Chrome Company manufactures three chrome-plated productsautomobile bumpers, valve...
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Transcribed Image Text: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 1,400
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 $7,663,000 of
annual manufacturing overhead. Of this amount, $2,150,000 is associated with the Large Bag line, $3,415,000 is associated with the Medium Bag line, and $2,098,000
is associated with the Small Bag line. Cooper's Bags Company is currently running a total of 38,000 machine hours: 13,900 in the Large Bag line, 16,300 in the
Medium Bag line, and 7,800 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 Bags has been overcosted; Medium and Small have been undercosted.
B. Large, Medium, and Small Bags have all been undercosted.
C. Large Bags has been undercosted; Medium and Small have been overcosted.
D. Large, Medium, and Small Bags have all been overcosted.
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