Orlando Avionics Makes Three Types of Radios for Small Aircraft-Model

question 143

Multiple Choice

Orlando Avionics makes three types of radios for small aircraft-model A, model B, and model C. The manufacturing operations are mechanized and there is no direct labor. Manufacturing overhead costs are significant, and Orlando has adopted an activity-based costing system. Direct materials costs per unit for each model are as follows:
Model A $28
Model B $32
Model C $40
Orlando has three activities-assembly, materials management, and testing. The cost driver for assembly is machine hours. The cost driver for materials management is number of parts, and the cost driver for testing is the number of units of product. Total costs and production volumes for the year 2012 were estimated as follows:
$$\begin{array} { | l | r | r | r | } \hline & \text { Total cost } & { \text { Total units } } & \\\hline \text { Assembly } & \$ 780,000 & 120,000 & \text { Machine hours } \\\hline \text { Materials management } & \$ 120,000 & 80,000 & \text { Parts } \\\hline \text { Testing } & \$ 22,500 & 5,000 & \text { Units } \\\hline\end{array}$$
-
What is the allocation rate for the materials management activity? (Please round to the nearest cent.)

• A) $0.67 per part
• B) $1.50 per part
• C) $0.15 per part
• D) $6.00 per part

---

Definitions:

Food Chain

Description of who eats whom in one path of energy flow through an ecosystem.

Ecoregion

A large area of Earth's surface characterized by a distinct ecological community of plants, animals, and microbial organisms, shaped by similar climate, landform, and soil conditions.

Western Coast

The land along the western edge of a continent that borders an ocean or sea.

Eastern Coast

Refers to the eastern seaboard or boundary of a continent or country, facing an ocean or sea.