Swiss Furniture Company manufactures bookshelves and uses an activity-based costing system to allocate all manufacturing conversion costs. The following information is provided for the month of May: Each bookshelf consists of 4 parts. The direct materials cost per bookshelf is $30.00.
What is the total manufacturing cost per bookshelf?

Question

Swiss Furniture Company manufactures bookshelves and uses an activity-based costing system to allocate all manufacturing conversion costs. The following information is provided for the month of May:  Each bookshelf consists of 4 parts. The direct materials cost per bookshelf is $30.00.
What is the total manufacturing cost per bookshelf?

Quizplus · Accepted Answer

We are given that Swiss Furniture Company uses an activity-based costing system to allocate all manufacturing conversion costs. However, no information regarding the cost of manufacturing conversion costs is given. Therefore, we cannot directly calculate the total manufacturing cost per bookshelf.

The given information states that each bookshelf consists of 4 parts and that the direct materials cost per bookshelf is $30. Hence, the total direct materials cost per bookshelf is 4*$30 = $120.

Therefore, the total manufacturing cost per bookshelf can be calculated by adding the manufacturing conversion cost to the total direct materials cost per bookshelf.

Since we cannot directly calculate the manufacturing conversion cost, we can use the options given to determine the best choice.

Option C offers the total cost per bookshelf as $54.80. This cost can cover the cost of direct materials as well as conversion costs involved in manufacturing a bookshelf.

Options A and B offer costs below the direct materials cost, which is not feasible. Option D offers a cost above the total direct materials cost per bookshelf, which is not reasonable. Hence, option C is the most reasonable choice.

Swiss Furniture Company Manufactures Bookshelves and Uses an Activity-Based Costing