Yallow, Inc

Multiple Choice

Yallow, Inc. manufactures teddy bears and dolls. Currently, Yallow makes 2,000 teddy bears each month. Each teddy bear uses $2.00 in direct materials and $0.50 in direct labor. Yallow uses two activities in manufacturing the teddy bears: Sewing and Processing. The cost associated with Sewing is $15,000 a month, allocated on the basis of direct labor hours. The cost associated with Processing is $10,000 a month, allocated on the basis of batches. The activity drivers are used as follows: Teddy Bears
Dolls
Direct labor hours
200
200
Batches
35
65
What is the total manufacturing cost for one teddy bear?

A) $2.50
B) $4.50
C) $7.00
D) $8.00