Answer the Following Questions Using the Information Below:
Warne Limited

question 166

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 the traditional method is used and a batch of 500 remote controls is produced? The batch requires 1000 parts,10 direct manufacturing labour hours and 15 minutes of inspection time.

• A)$2.00 per remote control
• B)$2000.00 per remote control
• C)$0.25 per remote control
• D)$4.00 per remote control

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Definitions:

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