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: $$\begin{array} { | l | r | l | r | }
\hline \text { Activity } & \begin{array} { l }
\text { Estimated Indirect } \
\text { Activity Costs }
\end{array} & \text { Allocation Base } & \begin{array} { l }
\text { Estimated Quantity of } \
\text { Allocation Buse }
\end{array} \
\hline \text { Materials handling } & \$ 3,000 & \text { Number of parts } & \text { 6,000 parts } \
\hline \text { Assembling } & \$ 7,200 & \text { Number of parts } & 6,000 \text { parts } \
\hline \text { Packaging } & \$ 4,000 & \text { Number of pillows } & 2,000 \text { pillows } \
\hline
\end{array}$$ Each pillow consists of 3 parts; the total direct materials cost per pillow is $8.00.
-
What is the total manufacturing cost 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: $$\begin{array} { | l | r | l | r | } 
\hline \text { Activity } & \begin{array} { l } 
\text { Estimated Indirect } \
\text { Activity Costs }
\end{array} & \text { Allocation Base } & \begin{array} { l } 
\text { Estimated Quantity of } \
\text { Allocation Buse }
\end{array} \
\hline \text { Materials handling } & \$ 3,000 & \text { Number of parts } & \text { 6,000 parts } \
\hline \text { Assembling } & \$ 7,200 & \text { Number of parts } & 6,000 \text { parts } \
\hline \text { Packaging } & \$ 4,000 & \text { Number of pillows } & 2,000 \text { pillows } \
\hline
\end{array}$$ Each pillow consists of 3 parts; the total direct materials cost per pillow is $8.00.
-
What is the total manufacturing cost per pillow?

Quizplus · Accepted Answer

Since the total direct materials cost for each pillow is $8.00 and we are given that the company uses an activity-based costing system to allocate all manufacturing conversion costs, we need to consider the manufacturing conversion costs per pillow. Based on the information provided, the total manufacturing cost per pillow is $7.10 (as given in option D) plus the total direct materials cost per pillow of $8.00, bringing the total cost to $15.10 (option C). Therefore, the best choice is C as it takes into account the total cost of manufacturing each pillow.

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