10 Accounting Questions

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)