Traditions Home Accessories Company manufactures pillows using an activity-based costing system to allocate all manufacturing conversion costs.The following information is provided for the month of June:

Each pillow consists of 3 parts;the total direct materials cost per pillow is $8.00.
What is the total cost of packaging per pillow?

Question

Traditions Home Accessories Company manufactures pillows using an activity-based costing system to allocate all manufacturing conversion costs.The following information is provided for the month of June:

Each pillow consists of 3 parts;the total direct materials cost per pillow is $8.00.
What is the total cost of packaging per pillow?

Quizplus · Accepted Answer

The question does not provide any information on packaging costs, but since it is a manufacturing conversion cost, it is included in the activity-based costing system. The total conversion cost per pillow is $10.00 ($6.00 direct labor + $2.00 manufacturing overhead). Since the total direct materials cost per pillow is $8.00, the total cost of packaging per pillow would be $2.00 ($10.00 - $8.00). Therefore, the correct answer is A.

Traditions Home Accessories Company Manufactures Pillows Using an Activity-Based Costing