Pittinger Company manufactures cuckoo clocks and uses an activity-based costing
ID: 2419979 • Letter: P
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:
Activity Allocation Base Cost Allocation Rate
Materials handling Number of parts $1.25 per part
Machining Machine hours $2.50 per machine hour
Assembling Number of parts $0.50 per part
Packaging Number of finished units $1.50 per finished unit
What is the cost of assembling per cuckoo clock?
Select one:
a. $4.50
b. $12.50
c. $5.00
d. $3.00
Explanation / Answer
Answer for cost of assembling per cuckoo clock is c. $5 (0.5 *10)
Workings
Activity Allocation Base Cost Allocation Rate
Assembling Number of parts $0.50 per part
Cuckoo clock consists of 10 parts
Therefore, assembling cost per cuckoo clock will be 10 * 0.5 = $5