Orlando Avionics Makes Three Types of Radios for Small Aircraft

question 4

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: $$\begin{array} { | l | l | } \hline \text { Model A } & \$ 28 \\\hline \text { Model B } & \$ 32 \\\hline \text { Model C } & \$ 40 \\\hline\end{array}$$ 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 2015 were estimated as follows:
$$\begin{array} { | l | c | c | c | } \hline & \text { Total cost } & \text { Total units } & \text { Cost Driver } \\\hline \text { Assembly } & \$ 780,000 & 120,000 & \text { Machine hours } \\\hline \text { Materials management } & \$ 120,000 & 80,000 & \text { Parts } \\\hline \text { Testing } & \$ 22,500 & 5,000 & \text { Units } \\\hline\end{array}$$ The Model A radio requires 12 parts to construct, and requires 16 machine hours of processing. What is the manufacturing cost to make one unit of Model A?

• A) $150.00
• B) $132.00
• C) $126.50
• D) $154.50

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Definitions:

Pollution

The introduction of contaminants into the natural environment that cause adverse change to air, water, or soil.

Factory Smokestack

A large chimney through which industrial gases, smoke, and particles are expelled into the atmosphere, often associated with manufacturing plants.

Preventable Health Problems

Health issues that can be avoided through interventions such as vaccinations, healthy lifestyle choices, and public health measures.