Aviatrix Avionics Makes Three Types of Radios for Small Aircraft-Model $$\begin{array} { l l } \text { Model A } & \$ 28 \\\text { Model B } & \$ 30 \\\text { Model C } & \$ 38\end{array}$$

question 40

Multiple Choice

Aviatrix 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 Aviatrix has adopted an activity-based costing system.Direct materials costs per unit for each model are as follows: $$\begin{array} { l l } \text { Model A } & \$ 28 \\\text { Model B } & \$ 30 \\\text { Model C } & \$ 38\end{array}$$ Aviatrix has three activities-assembly,materials management,and testing.The cost driver for assembly is machine hours.The cost driver for materials management is the number of parts,and the cost driver for testing is the number of units of product.Total costs and production volumes for the year were estimated as follows:
$$\begin{array} { | l | l | l | c | } \hline& { \text { Total cost } } & { \begin{array} { c } \text { Allocation } \\\text { Base }\end{array} } & \text { Cost Driver } \\\hline \text { Assembly } & \$ 792,000 & 120,000 & \text { Machine hours } \\\hline \text { Materials management } & \$ 136,000 & 80,000 & \text { Parts } \\\hline \text { Testing } & \$ 35,000 & 5600 & \text { Units } \\\hline\end{array}$$ The Model A radio requires 12 parts to construct and 18 machine hours of processing.What is the manufacturing cost to make one unit of Model A? (Round any intermediate calculations to the nearest cent,and your final answer to the nearest dollar.)

• A) $167
• B) $55
• C) $145
• D) $173

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Definitions:

Profit

The financial gain realized when the revenue from business activities exceeds the costs and expenses associated with its operation.

Bales

Large bundles or packages of material, most commonly used in reference to agriculture commodities like hay or cotton.

Profit-maximizing

In economics, this refers to the process by which a firm determines the price and output level that returns the greatest profit.

Profit

is the financial gain realized when the revenue generated from business activities exceeds the expenses, costs, and taxes needed to sustain the activity.