Brannon Company manufactures ceiling fans and uses an activity-based costing system. Each ceiling fan consists of 20 separate parts totaling $95 in direct materials, and requires 2.5 hours of machine time to produce. Additional information follows:
$\begin{array}{|l|l|r|}
\hline\text { Activity }&\text { Allocation Base }&\text { Cost Allocation Rate }\
\hline \text { Materials handling } & \text { Number of parts } & \$ .08 \
\hline \text { Machining } & \text { Machine hours } & \$ 7.20 \
\hline \text { Assembling } & \text { Number of parts } & \$ .35 \
\hline \text { Packaging } & \text { Number of finished units } & \$ 2.70\
\hline
\end{array}$

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What is the cost of machining per ceiling fan?

Question

Brannon Company manufactures ceiling fans and uses an activity-based costing system. Each ceiling fan consists of 20 separate parts totaling $95 in direct materials, and requires 2.5 hours of machine time to produce. Additional information follows:
$\begin{array}{|l|l|r|}
\hline\text { Activity }&\text { Allocation Base }&\text { Cost Allocation Rate }\
\hline \text { Materials handling } & \text { Number of parts } & \$ .08 \
\hline \text { Machining } & \text { Machine hours } & \$ 7.20 \
\hline \text { Assembling } & \text { Number of parts } & \$ .35 \
\hline \text { Packaging } & \text { Number of finished units } & \$ 2.70\
\hline
\end{array}$

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What is the cost of machining per ceiling fan?

Quizplus · Accepted Answer

The cost of machining per ceiling fan is calculated by multiplying the machine hours required (2.5 hours) by the cost allocation rate for machining ($7.20 per hour), resulting in $18.00.

Brannon Company Manufactures Ceiling Fans and Uses an Activity-Based Costing