Seasonal Delights manufactures a wide variety of holiday and seasonal decorative
ID: 2420573 • Letter: S
Question
Seasonal Delights manufactures a wide variety of holiday and seasonal decorative items. Seasonal's activity-based costing overhead rates are:
The Snow Man project involved three purchase orders, 4,000 square feet/days, 60 machine hours, and 40 direct labor hours. The cost of direct materials on the job was $19,000 and the direct labor rate is $30 per hour.
Determine the total cost of the Snow Man project.
Explanation / Answer
Cost drivers
Per unit cost
Total conversion cost
Purchasing
380 per order
3 orders
1140
Storing
2 per square foot/days
4,000 square feet/days
8000
Machining
100 per machine hour
60 machine hours
6000
Supervision
5 per direct labor hour
40 direct labor hours
200
Total conversion cost
15340
Total cost of the Snow Man project = Material cost + labor cost + conversion cost
= 19000 + 1200 + 15340
= $ 35540
Cost drivers
Per unit cost
Total conversion cost
Purchasing
380 per order
3 orders
1140
Storing
2 per square foot/days
4,000 square feet/days
8000
Machining
100 per machine hour
60 machine hours
6000
Supervision
5 per direct labor hour
40 direct labor hours
200
Total conversion cost
15340
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