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Author Question: Nichols Inc. manufactures remote controls. Currently the company uses a plant-wide rate for ... (Read 69 times)

saliriagwu

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Nichols Inc. manufactures remote controls. Currently the company uses a plant-wide rate for allocating manufacturing overhead. The plant manager is considering switching-over to ABC costing system and has asked the accounting department to identify the primary production activities and their cost drivers which are as follows:

ActivitiesCost driverAllocation Rate
Material handlingNumber of parts$5 per part
AssemblyLabor hours$20 per hour
InspectionTime at inspection station$10 per minute

The current traditional cost method allocates overhead based on direct manufacturing labor hours using a rate of $20 per labor hour.

What are the indirect manufacturing costs per remote control assuming an activity-based-costing method is used and a batch of 10 remote controls are produced? The batch requires 100 parts, 5 direct manufacturing labor hours, and 3 minutes of inspection time.
◦ $2.00 per remote control
◦ $63.00 per remote control
◦ $35.00 per remote control
◦ $630.00 per remote control


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Marked as best answer by saliriagwu on Mar 6, 2021

Bison

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saliriagwu

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Reply 2 on: Mar 6, 2021
YES! Correct, THANKS for helping me on my review


bigcheese9

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Reply 3 on: Yesterday
Great answer, keep it coming :)

 

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