Question

32) Tranquility Company manufactures ceiling fans and uses an activity-based costing system. Each ceiling fan has 20 separate parts. The direct materials cost is $95 and each ceiling fan requires 2.50 hours of machine time to manufacture. There is no direct labor. Additional information is as follows: Activity Materials handling Machining Assembling Packaging Allocation Base Number of parts Machine hours Number of parts Number of finished units Predetermined Overhead Allocation Rate $ 0.07 7.40 0.40 2.50 What is the total manufacturing cost per ceiling fan? (Round any intermediate calculations and your final answer to the nearest cent.) A) $106.90 B) $114.90 C) $122.90 D) $125.40

Answer 1

Correct answer---------(D) $125.40

Working

Activity name	Activity Rates	Activity	ABC Cost
	(A)	(B)	(A x B)
Material handling	$                       0.07	20.00	$                 1.40
Machining	$                       7.40	2.50	$               18.50
Assembly	$                       0.40	20.00	$                 8.00
Packaging	$                       2.50	1.00	$ 2.50
Direct material cost	$ 95.00	1	$ 95.00
Total cost including direct material assigned			$              125.40