Back Porch Company Manufactures Lawn Chairs Using an Activity-Based Costing

question 40

Multiple Choice

Back Porch Company manufactures lawn chairs using an activity-based costing system to allocate all manufacturing conversion costs.The following information is provided for the month of June:

Each lawn chair consists of 8 parts;the total direct materials cost per lawn chair is $10.00.
What is the total cost of materials handling and assembling for each lawn chair?

• A)$32.20
• B)$19.20
• C)$21.20
• D)$11.20

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Definitions:

FIFO Inventory Costs

An accounting method where the oldest inventory items are recorded as sold first.

LIFO Inventory Costs

An inventory valuation method where the last items placed in inventory are the first ones to be used or sold, affecting cost of goods sold and inventory value.

Cost of Goods Sold

Expenses directly related to the production of a company's sold merchandise.

Inventory-related Selling Costs

These are expenses directly tied to the selling of inventory items, such as shipping and handling fees.