The Sit-N-Spin Corporation manufactures and assembles office chairs. Sit-N-Spin uses an activity-based costing system to allocate all manufacturing conversion costs. Each chair consists of 10 separate parts totaling $145 in direct materials, and requires 6.0 hours of machine time to produce. Additional information follows: Activity Allocation Base Cost Allocation Rate Materials handling Number of parts $3.75 per part Machining Machine hours $3.00 per machine hour Assembling Number of parts $0.50 per part Packaging Number of finished units $4.75 per finished unitWhat is the cost of machining per chair?
The Sit-N-Spin Corporation manufactures and assembles office chairs. Sit-N-Spin uses an activity-based costing system to allocate all manufacturing conversion costs. Each chair consists of 10 separate parts totaling $145 in direct materials, and requires 6.0 hours of machine time to produce. Additional information follows: Activity Allocation Base Cost Allocation Rate Materials handling Number of parts $3.75 per part Machining Machine hours $3.00 per machine hour Assembling Number of parts $0.50 per part Packaging Number of finished units $4.75 per finished unitWhat is the cost of machining per chair?
Chapter6: Activity-based, Variable, And Absorption Costing
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Problem 6PB: Box Springs. Inc., makes two sizes of box springs: queen and king. The direct material for the queen...
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The Sit-N-Spin Corporation manufactures and assembles office chairs. Sit-N-Spin uses an activity-based costing system to allocate all manufacturing conversion costs. Each chair consists of 10 separate parts totaling $145 in direct materials, and requires 6.0 hours of machine time to produce. Additional information follows:
What is the cost of machining per chair?
Activity | Allocation Base | Cost Allocation Rate |
Materials handling | Number of parts | $3.75 per part |
Machining | Machine hours | $3.00 per machine hour |
Assembling | Number of parts | $0.50 per part |
Packaging | Number of finished units | $4.75 per finished unit |
Expert Solution
Step 1
Overheads are considered as fixed and common expenses that should be allocated to the products on the basis of different methods. Activity level allocation is one of the best methods for allocation.
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