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 inspections 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 inspections for next year (rounded)?

Quizplus · Accepted Answer

To calculate the cost per cost driver for inspections, we need to divide the budgeted cost for inspections ($215,000) by the total number of inspections (20,000). This gives us a cost per inspection of $10.75. Since each cage requires 3 inspections, the cost per cage is $32.25. However, the question asks for the cost per cost driver, which is the number of inspections per part. Since each small cage requires 5 inspections, each medium cage requires 6 inspections, and each large cage requires 8 inspections, we need to calculate a weighted average of the cost per inspection for each cage size based on the number of inspections per part. The calculation is as follows:

(5/19)*(10.75/3) + (6/19)*(10.75/3) + (8/19)*(10.75/3) = $3.58 per part

Therefore, the correct answer is C.

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