Nichols Inc

question 9

Multiple Choice

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:

The current traditional cost method allocates overhead based on direct manufacturing labor hours using a rate of $600 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 460 parts, 5 direct manufacturing labor hours, and 18 minutes of inspection time.

• A) $6.00 per remote control
• B) $13.30 per remote control
• C) $32.00 per remote control
• D) $1,330.00 per remote control

---

Definitions:

Prospects

Potential customers or clients who have been identified as likely to purchase a company's product or service.

Lead Cards

Information cards used by salespersons to record data on potential clients or leads, aiding in the tracking and follow-up process.

Woodworking Trade Fair

An event that provides a platform for professionals in the woodworking industry to display their products, share expertise, and network with others in the field.

Sales Pitch

A compelling presentation or discussion aimed at persuading an individual to buy a product or service.