Orlando Avionics Makes Three Types of Radios for Small Aircraft-Model

question 51

Multiple Choice

Orlando Avionics makes three types of radios for small aircraft-model A, model B, and model C. The manufacturing operations are mechanized and there is no direct labor. Manufacturing overhead costs are significant, and Orlando has adopted an activity-based costing system. Direct materials costs per unit for each model are as follows: Orlando has three activities-assembly, materials management, and testing. The cost driver for assembly is machine hours. The cost driver for materials management is number of parts, and the cost driver for testing is the number of units of product. Total costs and production volumes for the year 2012 were estimated as follows:
What is the allocation rate for the materials management activity? (Please round to the nearest cent.)

• A)$0.67 per part
• B)$1.50 per part
• C)$0.15 per part
• D)$6.00 per part

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Definitions:

Trust Agreement

A legal document that establishes a trust and outlines how it will be administered and specifies the rights and duties of the parties involved.

Indemnity Contracts

Legal agreements in which one party agrees to compensate another for any loss or damage incurred.

Negligently

The failure to exercise a reasonable standard of care, resulting in damage or harm to another.

Compensation

Compensation refers to the payment or benefit given to employees or workers for their services or to victims for their losses.