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28 January, 13:29

Tranquility Company manufactures ceiling fans and uses an activityminusbased costing system. Each ceiling fan has 20 separate parts. The direct materials cost is $ 85 and each ceiling fan requires 3 hours of machine time to manufacture. There is no direct labor. Additional information is as follows: Activity Allocation Base Predetermined Overhead Allocation Rate Materials handling Number of parts $ 0.04 Machining Machine hours 7.8 Assembling Number of parts 0.35 Packaging Number of finished units 3 What is the total manufacturing cost per ceiling fan? (Round any intermediate calculations and your final answer to the nearest cent.) A. $ 95.80 B. $ 116.20 C. $ 119.20 D. $ 109.20

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  1. 28 January, 15:25
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    The correct answer is C.

    Explanation:

    Giving the following information:

    Each ceiling fan has 20 separate parts.

    The direct materials cost is $ 85

    Each ceiling fan requires 3 hours of machine time to manufacture.

    Activity (Allocation Base) - Predetermined Overhead Allocation Rate

    Materials handling (Number of parts) - $0.04

    Machining (Machine hours) - $7.8

    Assembling (Number of parts) - $0.35

    Packaging (Number of finished units) - $3

    Total unitary cost = direct material + allocated overhead

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

    Total unitary cost = 85 + (0.04*20 + 7.8*3 + 0.35*20 + 3*1) = $119.2
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