27) Alpha Company manufactures breadboxes and uses an activity-based costing sys

Question

27) Alpha Company manufactures breadboxes and uses an activity-based costing system. The following information is provided for the month of May:

Activity

Estimated Indirect Activity Costs

Allocation Base

Estimated Quantity of Allocation Base

Materials handling

$3,500

Number of parts

5,000 parts

Assembling

$12,000

Number of parts

5,000 parts

Packaging

$5,750

Number of bread boxes

1,250 bread boxes

Each breadbox consists of 4 parts, and the direct materials cost per breadbox is $7.00. There is no direct labor. What is the total manufacturing cost per breadbox?

A) $17.40

B) $24.00

C) $12.40

D) $26.00

Activity

Estimated Indirect Activity Costs

Allocation Base

Estimated Quantity of Allocation Base

Materials handling

$3,500

Number of parts

5,000 parts

Assembling

$12,000

Number of parts

5,000 parts

Packaging

$5,750

Number of bread boxes

1,250 bread boxes

Explanation / Answer

the total manufacturing cost per breadbox=24

Manufacturing cost Per breadbox Direct material 7.00 Add indirect cost; Material handling (3500/5000)×4 2.8 Assembling(12000/5000)×4 9.6 Packaging(5750/1250) 4.6

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