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Telecom uses activity-based costing to allocate all manufacturing conversion costs. Telecom produces cellular telephones; each phone has $40.00 of direct materials, includes 30 parts and requires 3 hours of machine time. Additional information follows:

Activity Allocation Base Cost Allocation Rate
Materials handling Number of parts $0.50 per part
Machining Machine hours $14.00 per machine hour
Assembling Number of parts $1.00 per part
Packaging Number of finished units $2.00 per finished unit

What is the cost of machining per phone?

A. $30.00

B. $42.00

C. $6.00

D. 15.00

Respuesta :

Answer:

B. $42

Explanation:

Given that

Machine hours time = 3

Machine hour rate = $14

The computation of the cost of machining per phone is given below:-

= Machine hours time × Machine hour rate

= 3 × $14

= $42

So, for computing the cost of machining per phone simply we multiply the machine hour time with the machine hour rate so that the correct cost of machining per phone will come.

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