Skipper Company manufactures toy boats and uses an activity-based costing system.The following information is provided for the month of May: $$\begin{array} { | l | l | l | l | }
\hline \text { Activity } & \begin{array} { c }
\text { Estimated Indirect } \
\text { Activity Costs }
\end{array} & \text { Allocation Base } & \begin{array} { c }
\text { Estimated } \
\text { Quantity of } \
\text { Allocation Base }
\end{array} \
\hline \text { Materials handling } & \$ 3400 & \text { Number of parts } & 5000 \text { parts } \
\hline \text { Assembling } & \$ 5200 & \text { Number of parts } & 5000 \text { parts } \
\hline \text { Packaging } & \$ 5700 & \text { Number of boats } & 1300 \text { boats } \
\hline
\end{array}$$ Each boat consists of four parts,and the direct materials cost per boat is $7.28.There is no direct labor.What is the total manufacturing cost per boat? (Round any intermediate calculations and your final answer to the nearest cent.)
A) $11.26
B) $18.54
C) $2.98
D) $14.16

Question

Skipper Company manufactures toy boats and uses an activity-based costing system.The following information is provided for the month of May: $$\begin{array} { | l | l | l | l | } 
\hline \text { Activity } & \begin{array} { c } 
\text { Estimated Indirect } \
\text { Activity Costs }
\end{array} & \text { Allocation Base } & \begin{array} { c } 
\text { Estimated } \
\text { Quantity of } \
\text { Allocation Base }
\end{array} \
\hline \text { Materials handling } & \$ 3400 & \text { Number of parts } & 5000 \text { parts } \
\hline \text { Assembling } & \$ 5200 & \text { Number of parts } & 5000 \text { parts } \
\hline \text { Packaging } & \$ 5700 & \text { Number of boats } & 1300 \text { boats } \
\hline
\end{array}$$ Each boat consists of four parts,and the direct materials cost per boat is $7.28.There is no direct labor.What is the total manufacturing cost per boat? (Round any intermediate calculations and your final answer to the nearest cent.)
A) $11.26
B) $18.54
C) $2.98
D) $14.16

Quizplus · Accepted Answer

The total manufacturing cost per boat includes direct materials cost and allocated indirect costs. Direct materials cost per boat is given as $7.28. To find the allocated indirect costs per boat, we calculate the cost per unit of allocation base for each activity and then apply it based on the activity consumption by each boat.1. Materials handling cost per part = $3400 / 5000 parts = $0.68 per part2. Assembling cost per part = $5200 / 5000 parts = $1.04 per part3. Packaging cost per boat = $5700 / 1300 boats = $4.38 per boatSince each boat consists of four parts, the total indirect cost per boat for materials handling and assembling is:- Materials handling: $0.68 * 4 = $2.72- Assembling: $1.04 * 4 = $4.16Adding these to the packaging cost per boat gives the total indirect cost per boat:- Total indirect cost per boat = $2.72 (materials handling) + $4.16 (assembling) + $4.38 (packaging) = $11.26Therefore, the total manufacturing cost per boat is the sum of direct materials cost and total indirect costs:- Total manufacturing cost per boat = $7.28 (direct materials) + $11.26 (indirect costs) = $18.54

Skipper Company Manufactures Toy Boats and Uses an Activity-Based Costing