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 30 separate parts totaling $125 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 $6.00 per machine hour Assembling Number of parts $4.50 per part Packaging Number of finished units $7.75 per finished unitWhat is the cost of materials handling 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 30 separate parts totaling $125 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 $6.00 per machine hour Assembling Number of parts $4.50 per part Packaging Number of finished units $7.75 per finished unitWhat is the cost of materials handling per chair?
Chapter1: Financial Statements And Business Decisions
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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 30 separate parts totaling $125 in direct materials, and requires 6.0 hours of machine time to produce. Additional information follows:
What is the cost of materials handling per chair?
| Activity | Allocation Base | Cost Allocation Rate |
| Materials handling | Number of parts | $3.75 per part |
| Machining | Machine hours | $6.00 per machine hour |
| Assembling | Number of parts | $4.50 per part |
| Packaging | Number of finished units | $7.75 per finished unit |
Expert Solution
Introduction
The allocation base for materials handling is the number of parts used by a chair. As per the data, a chair requires 30 parts. Thus, the total cost of materials handling per chair can be calculated by multiplying the rate of part with the requirement.
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