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Brannon Company manufactures ceiling fans and uses an activity-based costing system to allocate all manufacturing overhead...

Brannon Company manufactures ceiling fans and uses an activity-based costing system to allocate all manufacturing overhead costs. Each ceiling fan consists of 20 separate parts totaling $95 in direct materials, and requires 2.5 hours of machine time to produce. The Cost Allocation Rates for activities are as follows: Material handling $ 0.08 per part; Machining $7.20 per machine hour; Assembling $0.35 per part; Packaging $2.70 per finished unit. What is the total manufacturing overhead cost per ceiling fan, not including the direct materials? (rounded)
a. All listed choices are incorrect.
b. $10.33
c. $124.30
d. $29.30

The monthly cost of heating our company office is a fixed cost, a CEO says, “because we adjust the thermostat according to the weather conditions which are beyond our control.” Do you agree? (Yes/No) And is this a variable cost?
Select one:
a. Yes, I agree, and this is not a variable cost.
b. Yes, I agree, and this is a variable cost.
c. No, I don’t agree, because this is a variable cost.
d. No, I don’t agree, because this is a mixed cost.
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Homework Answers

Answer #1

Question 1:

Answer: d. $29.30

Calculation:

Activity Cost Driver x Activity rate = Overhead cost per unit
Material Handling 20 parts x $0.08 per part = $1.60
Machining 2.5 hours x $7.20 per machine hour = $18.00
Assembling 20 parts x $0.35 per part = $7.00
Packaging 1 unit x $2.70 per unit = $2.70
Overhead cost per unit 29.30

Question 2:

Answer: a. Yes, I agree, and this is not a variable cost

Explanation:

The monthly cost of heating company office is a fixed cost, because the company office is open for hours and the usage remains the same. It does not affect the profit of the business and business operation. It is also not related with the production of units.

All the best...

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