Yuma,Inc.manufactures teddy bears and dolls.Currently,Yuma makes 2,000 teddy bears each month.Each teddy bear uses $2.00 in direct materials and $0.50 in direct labor.Yuma uses two activities in manufacturing the teddy bears: Sewing and Processing.The cost associated with Sewing is $15,000 a month,allocated on the basis of direct labor hours.The cost associated with Processing is $10,000 a month,allocated on the basis of batches.Teddy bears use 1/2 of the direct labor hours,and 35% of total batches.What is the total manufacturing cost for one teddy bear?
A)$2.50
B)$4.50
C)$7.00
D)$8.00

Question

Quizplus · Accepted Answer

The total manufacturing cost for one teddy bear includes direct materials, direct labor, and allocated overhead costs from Sewing and Processing. Direct materials cost $2.00, and direct labor costs $0.50. The Sewing cost allocated to teddy bears is $15,000 * 1/2 (since teddy bears use half of the direct labor hours) divided by 2,000 teddy bears, which equals $3.75 per teddy bear. The Processing cost allocated to teddy bears is $10,000 * 35% (since teddy bears use 35% of total batches) divided by 2,000 teddy bears, which equals $1.75 per teddy bear. Adding these costs together ($2.00 + $0.50 + $3.75 + $1.75) gives a total manufacturing cost of $8.00 per teddy bear.

Yuma,IncManufactures Teddy Bears and Dolls