Question

Tranquility Company manufactures ceiling fans and uses an activityminusbased costing system. Each ceiling fan has 20 separate parts. The direct materials cost is $ 85 and each ceiling fan requires 3 hours of machine time to manufacture. There is no direct labor. Additional information is as​ follows: Activity Allocation Base Predetermined Overhead Allocation Rate Materials handling Number of parts ​$ 0.04 Machining Machine hours 7.8 Assembling Number of parts 0.35 Packaging Number of finished units 3 What is the total manufacturing cost per ceiling​ fan? (Round any intermediate calculations and your final answer to the nearest​ cent.) A. $ 95.80 B. $ 116.20 C. $ 119.20 D. $ 109.20

Answer 1

The correct answer is C.

Step-by-step explanation:

Giving the following information:

Each ceiling fan has 20 separate parts.

The direct materials cost is $ 85

Each ceiling fan requires 3 hours of machine time to manufacture.

Activity (Allocation Base) - Predetermined Overhead Allocation Rate

Materials handling (Number of parts) - ​$0.04

Machining (Machine hours) - $7.8

Assembling (Number of parts) - $0.35

Packaging (Number of finished units) - $3

Total unitary cost= direct material + allocated overhead

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

Total unitary cost= 85 + (0.04*20 + 7.8*3 + 0.35*20 + 3*1)= $119.2