Question

Yallow, Inc. manufactures teddy bears and dolls. Currently, Yellow makes 2,350 teddy bears each month. Each teddy bear uses $7.25 in direct materials and $2.25 in direct labor. Yallow uses two activities in manufacturing the teddy bears: Sewing and Processing. The cost associated with Sewing is $17,625 a month, allocated on the basis of direct labor hours. The cost associated with Processing is $11.750 a month, allocated on the basis of batches. The activity drivers are used as follows:

Teddy Bears Dolls
Direct labor hours 207 207
Batches 84 156
What is the total manufacturing cost for one teddy bear?
Multiple Choice
a. $15.00
b. $14.00
c. $11.50
d. $9.50

Answer 1

The total manufacturing cost for one teddy bear is $15.00. The Option A is correct.

Manufacturing cost refers to the total expenses incurred by a company during the production of goods, encompassing expenses related to materials, labor, overhead and other direct and indirect costs associated with the manufacturing process.

The calculation of the Total manufacturing cost for one teddy bear is as follows.

Direct materials per teddy bear + Direct labor per teddy bear + Overhead per teddy bear

= $7.25 + $2.25 + [ $12,925 / 2,350 ]

= $5.50

Therefore, the total manufacturing cost for one teddy bear is $15.00