Bridgewater Toys Ltd. manufactures skateboards, boogie boards and scooters. Bridgewater has always allocated the indirect manufacturing overhead based on direct labour hours at a rate of $25 per hour. The plant manager believes this is not accurate and wants to change to a more accurate method of cost allocation. The accounting department provided the following analysis of the relationships between production activities and manufacturing overhead: 

 

Activity                         Cost driver         Allocation rate

Materials handling         number of parts        $0.25 per part

Assembly                      machine hours          $4.50 per hour

Packaging                     labour hours              $4.00 per hour

 

A typical batch of 100 skateboards requires 1200 parts, 17 direct labour hours and 8 hours of machine time. 

 

Required

1. What would be the total indirect manufacturing costs allocated to each skateboard using their normal overhead allocation method? (5 marks)