Question

Blade Breeze Company manufactures ceiling fans and uses an activity-based costing system. Each ceiling fan has 20 separate parts. The direct materials cost is $70, and each ceiling fan requires 2.50 hours of machine time to manufacture. Additional information is as follows:

Activity Allocation Base Predetermined Overhead Allocation Rate
Materials handling Number of parts $ 0.08
Machining Machine hours 7.20
Assembling Number of parts 0.35
Packaging Number of finished units 2.80
What is the cost of machining per ceiling fan? (Round any intermediate calculations and your final answer to the nearest cent.)
A) $18.00
B) $70.00
C) $144.00
D) $196.00

Answer 1

Machining= $18

Step-by-step explanation:

Giving the following information:

Each ceiling fan requires 2.50 hours of machine time to manufacture.

Machining Machine hours 7.20

To calculate the cost of machining per ceiling fan, we need to use the following formula:

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Machining= 2.5*7.2

Machining= $18