Brannon Company manufactures ceiling fans and uses an activity-based costing system. Each ceiling fan consists of 20 separate parts. The direct material cost is $95 and each ceiling fan requires 2.5 hours of machine time to manufacture. There is no direct labor cost. Additional information is as follows: $$\begin{array} { | l | l | c | }
\hline{ \text { Activity } } & { \text { Allocation Base } } & \text { Cost Allocation Rate \$ } \
\hline \text { Materials handling } & \text { Number of parts } & 0.08 \
\hline \text { Machining } & \text { Machine hours } & 7.20 \
\hline \text { Assembling } & \text { Number of parts } & 0.35 \
\hline \text { Packaging } & \text { Number of finished units } & 2.70 \
\hline
\end{array}$$ What is the total manufacturing cost per ceiling fan?

Question

Brannon Company manufactures ceiling fans and uses an activity-based costing system. Each ceiling fan consists of 20 separate parts. The direct material cost is $95 and each ceiling fan requires 2.5 hours of machine time to manufacture. There is no direct labor cost. Additional information is as follows: $$\begin{array} { | l | l | c | } 
\hline{ \text { Activity } } &  { \text { Allocation Base } } & \text { Cost Allocation Rate \$ } \
\hline \text { Materials handling } & \text { Number of parts } & 0.08 \
\hline \text { Machining } & \text { Machine hours } & 7.20 \
\hline \text { Assembling } & \text { Number of parts } & 0.35 \
\hline \text { Packaging } & \text { Number of finished units } & 2.70 \
\hline
\end{array}$$ What is the total manufacturing cost per ceiling fan?

Quizplus · Accepted Answer

The total manufacturing cost per ceiling fan is calculated as follows:  Direct material cost = $95  Materials handling cost = 20 parts * $0.08 = $1.60  Machining cost = 2.5 hours * $7.20 = $18.00  Assembling cost = 20 parts * $0.35 = $7.00  Packaging cost = 1 unit * $2.70 = $2.70  Total cost = $95 + $1.60 + $18.00 + $7.00 + $2.70 = $124.30

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