Formosa Steel Products Makes Steel Building Materials for Export, and Uses

question 139

Multiple Choice

Formosa Steel Products makes steel building materials for export, and uses an activity-based costing system to account for the indirect manufacturing costs of its various products. Indirect costs for the whole factory are broken down into three activities-casting, materials handling, and milling. The cost driver for casting is machine hours; the cost driver for material handling is kilograms, and the cost driver for milling is direct labor hours. Activity costs and volumes for the year were estimated as follows: One product is steel reinforcement rods, sold by the metric ton. Engineering reports show that one metric ton of steel reinforcement rods requires $100 of direct materials cost plus $50 of direct labor cost. Producing one metric ton of steel rods also requires 24 machine hours for casting, weighs 1,000 kilograms, and requires 15 direct labor hours.
What is the full manufacturing cost for one metric ton of steel reinforcement rods? (Please round to the nearest whole dollar.)

• A)$1,130
• B)$980
• C)$1,030
• D)$975

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Definitions:

REM Sleep

A phase of sleep characterized by Rapid Eye Movement, during which dreaming often occurs and brain activity increases.

Dreaming

A series of thoughts, images, or emotions occurring during sleep, especially during REM sleep phases.

Restorative Theory

A theory proposing that sleep is necessary for the body to repair and rejuvenate itself.

Repair

The process of fixing or restoring something damaged, defective, or worn out to return it to a good condition.