Question

Tranquility 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 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 $ 0.08
Machining Machine hours 7.6
Assembling Number of parts 0.2
Packaging Number of finished units 2.7
What is the total manufacturing cost per ceiling fan? (Round any intermediate calculations and your final answer to the nearest cent.)

Answer 1

unitary manufacturing cost= $101.1

Step-by-step explanation:

Giving the following information:

Each ceiling fan has 20 separate parts.

The direct materials cost is $70 and each ceiling fan requires 3 hours of machine time to manufacture.

Activity Allocation Base Predetermined Overhead Allocation Rate

Materials handling Number of parts $ 0.08

Machining Machine hours 7.6

Assembling Number of parts 0.2

Packaging Number of finished units 2.7

First, we need to allocate overhead using the following formula:

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

Materials handling= 0.08*20= $1.6

Machining= 7.6*3= $22.8

Assembling= 0.2*20= $4

Packaging= 2.7*1= $2.7

Total allocate overhead per unit= $31.1

Now, we can calculate the unitary manufacturing cost:

unitary manufacturing cost= 70 + 31.1

unitary manufacturing cost= $101.1