Answer the Following Questions Using the Information Below:
Nichols Inc

question 126

Multiple Choice

Answer the following questions using the information below:
Nichols Inc. manufactures remote controls. Currently the company uses a plant-wide rate for allocating manufacturing overhead. The plant manager is considering switching-over to ABC costing system and has asked the accounting department to identify the primary production activities and their cost drivers which are as follows:
$$\begin{array} { l r r } \text { Activities } & \text { Cost driver } & \text { Allocation Rate } \\\text { Material handling } & \text { Number of parts } & \$ 2 \text { per part } \\\text { Assembly } & \text { Labor hours } & \$ 20 \text { per hour } \\\text { Inspection } & \text { Time at inspectionstation } & \$ 3 \text { per minute }\end{array}$$ The current traditional cost method allocates overhead based on direct manufacturing labor hours using a rate of $200 per labor 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 are produced? The batch requires 100 parts,6 direct manufacturing labor hours,and 2.5 minutes of inspection time.

• A) $4.00 per remote control
• B) $6.55 per remote control
• C) $24.00 per remote control
• D) $327.50 per remote control

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Definitions:

Responsiveness

The quality of reacting quickly and positively, especially to the needs, problems, or wishes of others.

Treatment

The management and care of a patient for the purpose of combating a disease or disorder.

Hallucinations

Sensory experiences that appear real but are created by the mind, such as seeing, hearing, or feeling something that isn't actually present.

Stimuli

External or internal changes that affect the senses and can elicit a response from an organism.