Exhibit 17-3 Bird's Eye View manufactures three different sizes of bird cages: small (for finches and canaries), medium (for cockatiels and small parrots), and large (for cockatoos and other large parrots). The company has recently implemented an activity-based costing system. Bird's Eye View has identified five different production activities as well as the best cost driver for each activity. Each activity and driver is listed below, along with the budgeted amount that is associated with each activity for next year.
The following information relates to each size of bird cage and next year's anticipated manufacturing operations:

-Refer to Exhibit 17-3. What is Bird's Eye View cost per cost driver for automated processing for next year (rounded)?

Question

Exhibit 17-3 Bird's Eye View manufactures three different sizes of bird cages: small (for finches and canaries), medium (for cockatiels and small parrots), and large (for cockatoos and other large parrots). The company has recently implemented an activity-based costing system. Bird's Eye View has identified five different production activities as well as the best cost driver for each activity. Each activity and driver is listed below, along with the budgeted amount that is associated with each activity for next year.
 The following information relates to each size of bird cage and next year's anticipated manufacturing operations:
 
-Refer to Exhibit 17-3. What is Bird's Eye View cost per cost driver for automated processing for next year (rounded)?

Quizplus · Accepted Answer

To calculate the cost per cost driver for automated processing, we need to divide the budgeted cost for automated processing ($450,000) by the total expected number of parts automated processing will be used for (31,500).

$450,000 / 31,500 parts = $14.29 per part

Therefore, the answer is C.

As for the best choice, it will depend on the context of the decision being made. Is the decision related to pricing the bird cages? If so, knowing the cost per cost driver for each size of bird cage would be useful. Is the decision related to improving efficiency in the manufacturing process? If so, identifying which activities have the highest costs and finding ways to reduce those costs would be important.

Exhibit 17-3 Bird's Eye View Manufactures Three Different Sizes of Bird