General Products Company manufactures toaster ovens and uses an activity-based costing system to allocate all manufacturing conversion costs.The following information is provided for the month of May:

Each toaster oven consists of 3 parts.The direct materials cost per toaster oven is $25.00.
What is the total manufacturing cost per toaster oven?

Question

General Products Company manufactures toaster ovens and uses an activity-based costing system to allocate all manufacturing conversion costs.The following information is provided for the month of May:

Each toaster oven consists of 3 parts.The direct materials cost per toaster oven is $25.00.
What is the total manufacturing cost per toaster oven?

Quizplus · Accepted Answer

The total manufacturing cost per toaster oven can be calculated as follows:

Direct materials cost per toaster oven = $25.00

Manufacturing conversion cost per toaster oven = $10.00 + $7.50 + $0.50 = $18.00 (from the given information)

Total manufacturing cost per toaster oven = Direct materials cost per toaster oven + Manufacturing conversion cost per toaster oven
= $25.00 + $18.00 
= $43.00

Therefore, the best choice is A) $42.50, which is the closest answer to the calculated cost.

General Products Company Manufactures Toaster Ovens and Uses an Activity-Based