Fidelity Stereo Company has provided the following information regarding its activity-based costing system: Purchasing department costs are allocated based on purchase orders, and the predetermined overhead allocation rate is $ \$ 77 $ per purchase order.

Assembly department costs are allocated based on the number of parts used, and the predetermined overhead allocation rate is $ \$ 5 $ per part.

Packaging department costs are allocated based on the number of units produced, and the predetermined overhead allocation rate is $ \$ 4 $ per unit produced. Each stereo produced has 50 parts,and the direct materials cost per unit is $70.There are no direct labor costs.Fidelity Stereo has an order for 1200 stereos,which will require 45 purchase orders in all.What is the total cost for the 1200 stereos?
A) $392,265
B) $307,950
C) $303,465
D) $388,800

Question

Fidelity Stereo Company has provided the following information regarding its activity-based costing system: Purchasing department costs are allocated based on purchase orders, and the predetermined overhead allocation rate is $ \$ 77 $ per purchase order.

Assembly department costs are allocated based on the number of parts used, and the predetermined overhead allocation rate is $ \$ 5 $ per part.

Packaging department costs are allocated based on the number of units produced, and the predetermined overhead allocation rate is $ \$ 4 $ per unit produced. Each stereo produced has 50 parts,and the direct materials cost per unit is $70.There are no direct labor costs.Fidelity Stereo has an order for 1200 stereos,which will require 45 purchase orders in all.What is the total cost for the 1200 stereos?
A) $392,265
B) $307,950
C) $303,465
D) $388,800

Quizplus · Accepted Answer

The total cost for the 1200 stereos is the sum of the direct materials cost, the purchasing department costs, the assembly department costs, and the packaging department costs.Direct materials cost = 1200 stereos * $70 per stereo = $84,000Purchasing department costs = 45 purchase orders * $77 per purchase order = $3,465Assembly department costs = 1200 stereos * 50 parts per stereo * $5 per part = $300,000Packaging department costs = 1200 stereos * $4 per stereo = $4,800Total cost = $84,000 + $3,465 + $300,000 + $4,800 = $392,265

Fidelity Stereo Company Has Provided the Following Information Regarding Its $77 \$ 77 $77

Fidelity Stereo Company Has Provided the Following Information Regarding Its $\$ 77$