Hang Ten Company Manufactures Surf Boards and Uses an Activity-Based

question 15

Multiple Choice

Hang Ten Company manufactures surf boards and uses an activity-based costing system to allocate all manufacturing conversion costs. Each surf board consists of 10 separate parts totaling $135 in direct materials, and requires 3.0 hours of machine time to produce. Additional information follows: What is the total manufacturing cost per surf board?

• A)$211.25
• B)$97.25
• C)$227.50
• D)$30.00

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Definitions:

Equivalent Units

A concept used in cost accounting to convert the amount of work done on partially finished goods into the number of fully completed units.

Materials

Substances or components that are used in the production process to create a finished product.

First Processing Department

The initial stage or department in a manufacturing process where raw materials begin to be transformed into finished products.

Conversion Costs

Costs incurred to convert raw materials into finished goods, typically including direct labor and manufacturing overhead.