Answer the Following Questions Using the Information Below:
Warne Limited

question 131

Multiple Choice

Answer the following questions using the information below:
Warne Limited manufactures remote controls.Currently,the company uses a plant-wide rate for allocating manufacturing overhead.The plant manager believes it is time to refine the method of cost-allocation and has the accounting department identify the primary production activities and their cost drivers:
$$\begin{array} { l r r } \text { Activities } & \text { Cost Driver } & \text { Allocation Rate } \\\text { Material handling } & \text { Number of parts } & \$ 3 \text { per part } \\\text { Assembly } & \text { Labour hours } & \$ 30 \text { per hour } \\\text { Inspection } & \text { Time at inspection station } & \$ 4.50 \text { per minute }\end{array}$$ The current traditional cost method allocates overhead based on direct manufacturing labour hours using a rate of $200 per labour hour.
-What are the indirect manufacturing costs per remote control assuming an Activity-based costing method is used and a batch of 50 remote controls is produced? The batch requires 100 parts,6 direct manufacturing labour hours and 2.5 minutes of inspection time.

• A)$4.00 per remote control
• B)$9.83 per remote control
• C)$327.50 per remote control
• D)$24.00 per remote control

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Definitions:

Statutory Right

A right granted by legislation, which is enacted by a legislative body.

Intestate

The state of dying without having made a legal will, leading to the distribution of one's estate according to state or country laws.

Distributed

The process of allocating or dispersing items, resources, or information among multiple recipients or over various locations.

Constructive Trust

A legal remedy imposed by a court to prevent unjust enrichment, transforming the holder of property into a trustee for the benefit of another party.