The Cosmo Corporation Manufactures and Assembles Office Chairs

Multiple Choice

The Cosmo Corporation manufactures and assembles office chairs.Cosmo uses an activity-based costing system to allocate all manufacturing conversion costs.Each chair consists of 15 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 materials handling per chair?

A) $26.25
B) $7.50
C) $5.50
D) $4.00