Ace Plastics Produces Many Different Kinds of Products All in One

question 32

Multiple Choice

Ace Plastics produces many different kinds of products all in one manufacturing facility. They have identified four activities for their costing system:
Materials management - allocated by number of purchase orders
Chemical processing - allocated on metric tons
Molding - allocated on direct labor hours
Packaging - allocated by number of units produced
The activity rates are as follows:
$$\begin{array} { | l | r| r | } \hline \text { terials management } & \$ 12.00 & \text { Per purchase order } \\\hline \text { Chemical processing } & \$ 7.50& \text { Per metric ton } \\\hline \text { Molding } & \$ 24.00& \text { Per direct labor hour } \\\hline \text { Packaging } & \$ 0.10& \text { Per unit } \\\hline\end{array}$$
Ace received an order for 3,000 plastic toys. The engineering design shows that the order will require $540 of direct material cost in total, $90 of direct labor cost, will require 4 purchase orders, will use 2 metric tons of chemical base, will need 8 direct labor hours, and will produce 3.000 units of product. How much is the manufacturing cost for one unit of product? (Please round to the nearest tenth of a cent.)

• A) $0.630
• B) $0.365
• C) $0.395
• D) $0.185

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Definitions:

Lender

An individual, bank, or financial institution that provides funds to another with the expectation of being repaid.

Borrower

An individual or entity that takes funds from another under the agreement that the funds will be repaid, often with interest, over time.

Recording

The act of capturing data, events or performances in a permanent form for later playback or analysis.

Mortgage

A legal agreement by which a bank, credit union, or other lender lends money at interest in exchange for taking title of the debtor's property, with the condition that the conveyance of title becomes void upon the payment of the debt.