Room Chill Company manufactures ceiling fans and uses an activityminusbased costing system. Each ceiling fan has 20 separate parts. The direct materials cost is $ 85.00, and each ceiling fan requires 3.5 hours of machine time to manufacture. Additional information is as follows: Predetermined
Overhead
Activity Allocation Base Allocation Rate
Materials handling Number of parts $ 0.08
Machining Machine hours 7.20
Assembling Number of parts 0.35
Packaging Number of finished units 2.70
What is the total manufacturing cost per ceiling fan? (Round any intermediate calculations and your final answer to the nearest cent.)
A. $125.00
B. $115.90
C. $122.90
D. $100.50

Total unitary cost= $121.5

Explanation:

Giving the following information:

Each ceiling fan has 20 separate parts.

The direct materials cost is $85

Each ceiling fan requires 3.5 hours of machine time to manufacture.

Activity Allocation Base Allocation Rate

Materials handling Number of parts $ 0.08

Machining Machine hours 7.20

Assembling Number of parts 0.35

Packaging Number of finished units 2.70

To calculate the unitary manufacturing cost, we need to use the following formula:

Unitary manufacturing cost= direct material per unit + allocated overhead per unit

Allocated MOH= Estimated manufacturing overhead rate* Actual amount of allocation base

Materials handling= 0.08*20= $1.6

Machining= 7.20*3.5= $25.2

Assembling= 0.35*20= $7

Packaging= 2.70*1= $2.7

Total= $36.5

Total unitary cost= 85 + 36.5= $121.5

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