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:

Manufacturing Company

A company that produces finished goods from raw materials through the use of various machines, equipment, and processes.

Financial Accounting

The field of accounting concerned with summarizing, analyzing, and reporting financial transactions related to a business to external users.

Managerial Accounting

The field of accounting that focuses on providing information to managers for use in planning, decision-making, and operational control.

External Users

Individuals or entities outside of a company who use its financial statements, such as investors or creditors.