Orlando Avionics makes three types of radios for small aircraft: Model A, Model B, and Model C. The manufacturing operations are mechanized and there is no direct labor. Manufacturing overhead costs are significant, and Orlando has adopted an activity-based costing system. Direct materials costs per unit for each model are as follows:

Model A??.$28

Model B??.$32

Model C??.$40

Orlando has three activities: assembly, materials management, and testing. The cost driver for assembly is machine hours. The cost driver for materials management is number of parts, and the cost driver for testing is the number of units of product. Total costs and production volumes for the year 2015 were estimated as follows:

The Model A radio requires 12 parts to construct, and requires 16 machine hours of processing. What is the manufacturing cost to make one unit of Model A?

Transcribed Image Text:

Total cost Assembly $780,000 Materials management $120,000 Testing $22,500 Total units 120,000 80,000 5,000 Cost Driver Machine hours Parts Units Total cost Assembly $780,000 Materials management $120,000 Testing $22,500 Total units 120,000 80,000 5,000 Cost Driver Machine hours Parts Units

Answer rating: 100% (QA)

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