Beaver Company Manufactures Coffee Tables and Uses an Activity-Based Costing

question 77

Multiple Choice

Beaver Company manufactures coffee tables and uses an activity-based costing system to allocate all manufacturing conversion costs. Each coffee tables consists of 40 separate parts totaling $280 in direct materials, and requires 6.0 hours of machine time to produce. Additional information follows: What is the cost of assembling per coffee table?

• A)$80
• B)$42
• C)$11
• D)$200

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Definitions:

Conversion Costs

The sum of labor and overhead costs incurred to convert raw materials into finished goods.

Weighted-Average Method

A cost accounting method that calculates the cost of units produced during a period based on the weighted average of the costs of units available for sale or use.

Processing Department

A division within a factory where a specific stage of production is completed, typically involving a series of operations or processes.

Cost Transferred

The movement of accumulated costs from one cost center to another in the accounting period.