Electronics Unlimited Uses Activity-Based Costing to Allocate All Manufacturing Conversion

question 110

Multiple Choice

Electronics Unlimited uses activity-based costing to allocate all manufacturing conversion costs.Electronics Unlimited produces computer keyboards; each computer keyboard has $8.00 of direct materials,includes 12 parts and requires 1/2 hour of machine time.Additional information follows: $\begin{array}{|l|l|r|}\hline \text { Activity } & \text { Allocation Base } & \text { Cost Allocation Rate } \\\hline \text { Materials handling } & \text { Number of parts } & \$ .25 \text { per part } \\\hline \text { Machining } & \text { Machine hours } & \$ 12.00 \text { per machine hour } \\\hline \text { Assembling } & \text { Number of parts } & \$ 1.00 \text { per part } \\\hline \text { Packaging } & \text { Number of finished units } & \$ 1.75 \text { per finished unit } \\\hline\end{array}$

- What is the cost of machining per computer keyboard?

• A)$ 0.88
• B)$12.00
• C)$ 6.00
• D)$ 3.00

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Definitions:

Net Book Value

Net book value is the value at which an asset is carried on a balance sheet, equal to its cost minus accumulated depreciation and impairment charges.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a long-term asset from the time of its purchase to the reporting date.

Accumulated Depreciation

Accumulated depreciation represents the total amount of depreciation expense that has been recorded for an asset since its acquisition.

Recognized Gain

The amount of profit that is reported for accounting or tax purposes, realized upon the sale or exchange of an asset.