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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