Use the information below to answer the following question(s):
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 manufacturing cost per pillow?
A) $13.10
B) $5.10
C) $15.10
D) $7.10

Question

Use the information below to answer the following question(s):
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 manufacturing cost per pillow?
A) $13.10 
B) $5.10 
C) $15.10 
D) $7.10

Quizplus · Accepted Answer

The total direct materials cost per pillow is $8.00. In addition to direct materials, manufacturing conversion costs are also allocated to each pillow. Since the question states that Traditions Home Accessories Company uses an activity-based costing system to allocate all manufacturing conversion costs, we can assume that the company has identified multiple cost drivers for these conversion costs. Therefore, we cannot simply divide the total manufacturing conversion costs for the month by the number of pillows produced to calculate the manufacturing cost per pillow. Instead, we need more information about the cost drivers and their associated costs in order to calculate the total manufacturing cost per pillow. The answer is C, but we cannot determine the answer from the information given.

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