Skipper Company manufactures toy boats and uses an activity-based costing system.The following information is provided for the month of May: $\begin{array}{|l|l|l|l|}
\hline\text { Activity } & \begin{array}{c}
\text { Estimated Indirect } \
\text { Activity Costs }
\end{array} & \text { Allocation Base } & \begin{array}{c}
\text { Estimated } \
\text { Quantity of } \
\text { Allocation Base }
\end{array} \
\hline \text { Materials handling } & \$ 3400 & \text { Number of parts } & 5000 \text { parts } \
\hline \text { Assembling } & \$ 5200 & \text { Number of parts } & 5000 \text { parts } \
\hline \text { Packaging } & \$ 5700 & \text { Number of boats } & 1300 \text { boats }\\hline
\end{array}$ Each boat consists of four parts,and the direct materials cost per boat is $7.28.There is no direct labor.What is the total manufacturing cost per boat? (Round any intermediate calculations and your final answer to the nearest cent.)

Question

Quizplus · Accepted Answer

The total manufacturing cost per boat includes direct materials and allocated indirect costs. Direct materials cost per boat is $7.28. Indirect costs are calculated using activity rates: Materials handling ($3400/5000 parts = $0.68 per part), Assembling ($5200/5000 parts = $1.04 per part), and Packaging ($5700/1300 boats = $4.38 per boat). Each boat has 4 parts, so indirect costs per boat are (4 parts * $0.68) + (4 parts * $1.04) + $4.38 = $11.26. Total cost per boat is $7.28 + $11.26 = $18.54.

Skipper Company Manufactures Toy Boats and Uses an Activity-Based Costing