Telecom Uses Activity-Based Costing to Allocate All Manufacturing Conversion Costs

question 230

Multiple Choice

Telecom uses activity-based costing to allocate all manufacturing conversion costs. Telecom produces cellular telephones; each phone has $40.00 of direct materials, includes 10 parts and requires 6 hours of machine time. Additional information follows: What is the cost of assembling per phone?

• A)$24
• B)$18
• C)$5
• D)$20

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Definitions:

Risk-Free Asset

An investment that is assumed to have no risk of financial loss, often represented by government bonds or treasury bills.

Risky Asset

An investment that holds a certain degree of risk, possibly leading to loss, such as stocks or commodities.

Reward-To-Variability Ratio

A ratio that compares the expected return of an investment to the risk (variability) of that investment, often used to gauge the performance of investment portfolios.

Capital Market Line

A theoretical line used in the capital asset pricing model to illustrate the risk versus return trade-off for efficient portfolios.