Pittinger Company manufactures cuckoo clocks and uses an activity-based costing
ID: 2420465 • 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 total manufacturing cost per cuckoo clock?
a. $144.00 --correct answer but guessed it during a quiz. Can you please tell me how to solve it?
b. $142.50
c. $24.00
d. $153.00
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
Explanation / Answer
in $ direct material 120 Overhead Units of cost driver Materials handling Number of parts $1.25 per part 10 12.5 Machining Machine hours $2.50 per machine hour 2 5 Assembling Number of parts $0.50 per part 10 5 Packaging Number of finished units $1.50 per finished unit 1 1.5 total cost per unit 144