Telecom uses activity-based costing to allocate all manufacturing conversion costs. Telecom produces cellular telephones; each phone has $40.00 of direct materials, includes 30 parts and requires 3 hours of machine time. Additional information follows:
Activity Allocation Base Cost Allocation Rate
Materials handling Number of parts $0.50 per part
Machining Machine hours $14.00 per machine hour
Assembling Number of parts $1.00 per part
Packaging Number of finished units $2.00 per finished unit
What is the cost of machining per phone?
A. $30.00
B. $42.00
C. $6.00
D. 15.00
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