Aviatrix Avionics Makes Three Types of Radios for Small Aircraft-Model $\begin{array}{ll}\text { Model A } & \$ 22 \\\text { Model B } & \$ 31 \\\text { Model C } & \$ 38\end{array}$

question 130

Multiple Choice

Aviatrix 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 Aviatrix has adopted an activity-based costing system.Direct materials costs per unit for each model are as follows: $\begin{array}{ll}\text { Model A } & \$ 22 \\\text { Model B } & \$ 31 \\\text { Model C } & \$ 38\end{array}$ Aviatrix has three activities-assembly,materials management,and testing.The cost driver for assembly is machine hours.The cost driver for materials management is the number of parts,and the cost driver for testing is the number of units of product.Total costs and production volumes for the year were estimated as follows:
$$\begin{array} { | l | c | c | c | } \hline & \text { Total cost } & \begin{array} { c } \text { Allocation } \\\text { Base }\end{array} & \text { Cost Driver } \\\hline \text { Assembly } & \$ 784,000 & 122,500 & \text { Machine hours } \\\hline \text { Materials management } & \$ 132,000 & 88,000 & \text { Parts } \\\hline \text { Testing } & \$ 26,000 & 5200 & \text { Units } \\\hline\end{array}$$ The Model A radio requires 12 parts to construct and 20 machine hours of processing.What is the manufacturing cost to make one unit of Model A? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

• A)$168
• B)$45
• C)$151
• D)$173

Apply departmental accounting principles to real-life situations by solving problems and making informed decisions.

Understand how indirect expenses are apportioned among departments.

Calculate the contribution margin for a department.

Allocate building and utility costs to departments based on specified criteria.

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