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 20 separate parts totaling $125 in direct materials, and requires 2.0 hours of machine time to produce. Additional information follows: Activity Allocation Base Cost Allocation Rate Materials handling Number of parts $2.75 per part Machining Machine hours $3.00 per machine hour Assembling Number of parts $1.50 per part Packaging Number of finished units $2.75 per finished unitWhat is the cost of assembling 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 20 separate parts totaling $125 in direct materials, and requires 2.0 hours of machine time to produce. Additional information follows: Activity Allocation Base Cost Allocation Rate Materials handling Number of parts $2.75 per part Machining Machine hours $3.00 per machine hour Assembling Number of parts $1.50 per part Packaging Number of finished units $2.75 per finished unitWhat is the cost of assembling 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 20 separate parts totaling $125 in direct materials, and requires 2.0 hours of machine time to produce. Additional information follows:
What is the cost of assembling per chair?
| Activity | Allocation Base | Cost Allocation Rate |
| Materials handling | Number of parts | $2.75 per part |
| Machining | Machine hours | $3.00 per machine hour |
| Assembling | Number of parts | $1.50 per part |
| Packaging | Number of finished units | $2.75 per finished unit |
Expert Solution
Step 1 Introduction
Different costs to production are allocated on the basis of different variables, accordingly costs are assigned to the products.
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