Question
Skyline Florists uses an activity-based costing system (using two cost pools: (1) Wages and salaries and (2) other manufacturing expenses) to compute the cost of
Skyline Florists uses an activity-based costing system (using two cost pools: (1) Wages and salaries and (2) other manufacturing expenses) to compute the cost of making oral bouquets and delivering the bouquets to its commercial customers. To have the maximum exibility, the same set of employees are used for both manufacturing activities and delivery activity. In addition to producing bouquets, the employees also produce birthday greetings when they are not producing bouquets or delivering bouquets. Delivery cost is excluded from manufacutring cost as per GAAP. Accordingly, wages and salries cost and operating expenses cost are divided between manufacturing cost and SGA cost
The following table represents how ABC allocates these activity costs
Bouquet production Bouquet delivery Birthday greetings
Wages and salaries for the employees 50% 40% 10%
Other manufacturing expenses 60% 30% 10%
Skyline has the following budgeted data made available to you:
Budgeted wages and salries cost fo the employees $190,000
Budgeted Other operating expenses $40,000
Budgeted number of bouquets to be made 26,500
Budgeted number of bouquets deliveries 4,000
The cost of wages and salaries and other manufacturing expenses to be allocated to each bouquet for the purpose of computing the manufacturing cost of bouquet using ABC is closest to:
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