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Question - Bird's Eye View manufactures three different sizes of bird cages: small (for finches and canaries), medium (for cockatiels and small parrots), and large (for cockatoos and other large parrots). The company has recently implemented an activity-based costing system. Bird's Eye View has identified five different production activities as well as the best cost driver for each activity. Each activity and driver is listed below, along with the budgeted amount that is associated with each activity for next year.
Activity
Cost Driver
Budgeted Costs
Materials handling
Labor hours
$55,000
Automated processing
Machine hours
40,000
Plastic parts insertion
Number of parts
6,000
Inspections
29,000
Packaging
Orders shipped
31,000
Total indirect manufacturing cost
$161,000
The following information relates to each size of bird cage and next year's anticipated manufacturing operations:
Large
Medium
Small
Units to be produced
350
400
600
Orders to be shipped
180
200
250
Number of parts per unit
8
6
4
Machine hours per unit
2
1
Labor hours per unit
Under an activity-based costing system, what is the per unit cost for manufacturing overhead of a SMALL cage (rounded)?
A) $120
B) $151
C) $136
D) $100
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