Skipper Company manufactures toy boats and uses an activitybased 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 Number of parts parts Assembling Number of parts parts Packaging Number of boats boats Each boat consists of four parts, and the direct materials cost per boat is . There is no direct labor. What is the total manufacturing cost per boat? (Round any intermediate calculations and your final answer to the nearest cent.)

$ 22.97

Explanation:

Calculation for the total manufacturing cost per boat

First step is to Calculate the Activity rates

Activity Cost PoolActivity driverOverhead Cost (A)Expected Activity (B)Activity rate (A/B)

Materials handlingNumber of Part

$ 3,300÷3000=$ 1.10Per Part

AssemblingNumber of Part

$ 4,800÷3000 =$ 1.60Per Part

PackagingNumber of Boat

$ 6,000÷1300 =$ 4.62Per Boat

Second step is to Calculate the Cost assigned to Boat

Activity nameActivity RatesActivityABC Cost

(A)(B)(A x B)

Materials handling

$ 1.10 × 4.00=$ 4.40

Assembling

$ 1.60 × 4.00=$ 6.40

Packaging

$ 4.62 × 1.00 =$ 4.62

Total Overheads assigned per boat$ 15.42

($4.40+$6.40+$4.62)

Last step is to Calculate for the total manufacturing cost per boat

Boat

Direct material$ 7.55

Direct labor $0

Overheads$15.42

Total Cost per unit$ 22.97

($7.55+$15.42)

Therefore the total manufacturing cost per boat is $ 22.97

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