Fidelity Stereo Company has provided the following information regarding its activity-based costing system: • Purchasing department costs are allocated based on purchase orders,and the predetermined overhead allocation rate is $77 per purchase order.
• Assembly department costs are allocated based on the number of parts used,and the predetermined overhead allocation rate is $2 per part.
• Packaging department costs are allocated based on the number of units produced,and the predetermined overhead allocation rate is $4 per unit produced.
Each stereo produced has 50 parts,and the direct materials cost per unit is $60.There are no direct labor costs.Fidelity Stereo has an order for 1400 stereos,which will require 40 purchase orders in all.What is the total cost for the 1400 stereos?
A)$232,680
B)$148,000
C)$143,080
D)$229,600

Question

Quizplus · Accepted Answer

The total cost for the 1400 stereos is $232,680. This is calculated as follows:Direct materials cost: $60 x 1400 = $84,000Purchasing department costs: $77 x 40 = $3,080Assembly department costs: $2 x 50 x 1400 = $140,000Packaging department costs: $4 x 1400 = $5,600Total cost: $84,000 + $3,080 + $140,000 + $5,600 = $232,680

Fidelity Stereo Company Has Provided the Following Information Regarding Its