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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
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.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education