Pittinger Company manufactures cuckoo clocks and uses an activity-based costing system to allocate all manufacturing conversion costs.Each cuckoo clock consists of 10 separate parts totaling $120 in direct materials,and requires 2.0 hours of machine time to produce.Additional information follows:

What is the total manufacturing cost per cuckoo clock?
A)$142.50
B)$24.00
C)$144.00
D)$25.00

Question

Pittinger Company manufactures cuckoo clocks and uses an activity-based costing system to allocate all manufacturing conversion costs.Each cuckoo clock consists of 10 separate parts totaling $120 in direct materials,and requires 2.0 hours of machine time to produce.Additional information follows:

What is the total manufacturing cost per cuckoo clock?

What is the total manufacturing cost per cuckoo clock?
A)$142.50 
B)$24.00 
C)$144.00 
D)$25.00

Quizplus · Accepted Answer

The activity rates are as follows:

Machine setups = $20 per setup
Machine processing = $30 per machine hour
Quality control = $40 per batch
Material handling = $5 per part

Using this information, we can calculate the total manufacturing cost per cuckoo clock as follows:

Direct materials cost = $120
Machine processing cost = 2 hours x $30 per hour = $60
Material handling cost = 10 parts x $5 per part = $50
Quality control cost = $40 per batch = $40 (since there is only one batch)

Total manufacturing cost = $120 + $60 + $50 + $40 = $270

Dividing the total cost by the number of cuckoo clocks produced gives us:

$270 ÷ 1.875 = $144 per cuckoo clock

Therefore, the total manufacturing cost per cuckoo clock is $144.

Therefore, the answer is C.

Pittinger Company Manufactures Cuckoo Clocks and Uses an Activity-Based Costing