Answer the following questions using the information below:
Nichols, Inc., manufactures remote controls. Currently the company uses a plant-wide rate for allocating manufacturing overhead. The plant manager believes it is time to refine the method of cost allocation and has the accounting department identify the primary production activities and their cost drivers:
The current traditional cost method allocates overhead based on direct manufacturing labor hours using a rate of $200 per labor hour.
-What are the indirect manufacturing costs per remote control assuming an activity-based-costing method is used and a batch of 100 remote controls are produced? The batch requires 500 parts, 10 direct manufacturing labor hours, and 5 minutes of inspection time.
A)$12.15 per remote control
B)$1215 per remote control
C)$24.30 per remote control
D)$48.60 per remote control

Question

Answer the following questions using the information below:
Nichols, Inc., manufactures remote controls. Currently the company uses a plant-wide rate for allocating manufacturing overhead. The plant manager believes it is time to refine the method of cost allocation and has the accounting department identify the primary production activities and their cost drivers:
  The current traditional cost method allocates overhead based on direct manufacturing labor hours using a rate of $200 per labor hour.
-What are the indirect manufacturing costs per remote control assuming an activity-based-costing method is used and a batch of 100 remote controls are produced? The batch requires 500 parts, 10 direct manufacturing labor hours, and 5 minutes of inspection time.
A)$12.15 per remote control 
B)$1215 per remote control 
C)$24.30 per remote control 
D)$48.60 per remote control

Quizplus · Accepted Answer

Activity-based costing allocates indirect costs based on activities. Assuming the given costs are for the entire batch, $12.15 per remote control is the correct choice when dividing the total indirect costs by the number of remote controls in the batch.

Answer the Following Questions Using the Information Below