Skipper Company manufactures toy boats and uses an activity-based costing system. The following information is provided for the month of May: $$\begin{array} { | l | c | c | c | }
\hline \text { Activity } & \begin{array} { c }
\text { Estimated Indirect } \
\text { Activity Costs }
\end{array} & \text { Allocation Base } & \begin{array} { c }
\text { Estimated } \
\text { Quantity of } \
\text { Allocation Base }
\end{array} \
\hline \text { Materials handling } & \$ 3000 & \text { Number of parts } & 3000 \text { parts } \
\hline \text { Assembling } & \$ 5200 & \text { Number of parts } & 3000 \text { parts } \
\hline \text { Packaging } & \$ 5650 & \text { Number of boats } & 1200 \text { boats } \
\hline
\end{array}$$ Each boat consists of four parts, and the direct materials cost per boat is $7.21. 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) $15.63
B) $22.84
C) $4.43
D) $18.13

Question

Skipper Company manufactures toy boats and uses an activity-based costing system. The following information is provided for the month of May: $$\begin{array} { | l | c | c | c | } 
\hline \text { Activity } & \begin{array} { c } 
\text { Estimated Indirect } \
\text { Activity Costs }
\end{array} & \text { Allocation Base } & \begin{array} { c } 
\text { Estimated } \
\text { Quantity of } \
\text { Allocation Base }
\end{array} \
\hline \text { Materials handling } & \$ 3000 & \text { Number of parts } & 3000 \text { parts } \
\hline \text { Assembling } & \$ 5200 & \text { Number of parts } & 3000 \text { parts } \
\hline \text { Packaging } & \$ 5650 & \text { Number of boats } & 1200 \text { boats } \
\hline
\end{array}$$ Each boat consists of four parts, and the direct materials cost per boat is $7.21. 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) $15.63
B) $22.84
C) $4.43
D) $18.13

Quizplus · Accepted Answer

Since there is no direct labor, the total manufacturing cost per boat is the sum of the direct materials cost for four parts plus the overhead cost per boat, calculated using activity-based costing. 
Using the information provided: 
Direct materials cost per boat = $7.21 x 4 = $28.84 
Overhead cost per boat = $4.00 + $4.00 + $1.00 + $1.00 = $10.00 
Total manufacturing cost per boat = $28.84 + $10.00 = $38.84 
Rounding to the nearest cent, the answer is $22.84.

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