Rather Bedding Makes Two Types of Pillow-Down and Foam Which Two Cost Pools Could Be Combined Without Affecting the Is

question 108

Multiple Choice

Rather Bedding makes two types of pillow-down and foam. It is currently implementing an activity-based costing system. In the past, all overhead had been applied on the basis of machine hours. The company produces 6,000 down pillows and 18,000 foam pillows per year.
$\begin{array}{|l|c|c|c|c|}\hline\text { Cost Pool } & \begin{array}{c}\text { Driver and } \\\text { Level }\end{array} & \begin{array}{c}\text { Estimated } \\\text { Costs }\end{array} & \begin{array}{c}\text { Use of Driver by } \\\text { Down Pillows }\end{array} & \begin{array}{c}\text { Use of Driver by } \\\text { Foam Pillows }\end{array} \\\hline \text { Equiument setup } & 360 \text { setups } & \$ 216,000 & 120 \text { setups } & 240 \text { setups } \\\hline \text { Materials ordering } & 6,000 \text { orders } & \$ 60,000 & 2,400 \text { orders } & 3,600 \text { orders } \\\hline \text { Quality control }&2,000\text { inspections }&\$ 36,000 & 800 \text { inspections } & 1,200 \text { inspections }\\\hline \text { Machining }&\text { 8,000 machine hours }&\$86,000&\text { 4,200 machine hours }&\text { 3,800 machine hours }\\\hline\end{array}$
Which two cost pools could be combined without affecting the unit costs using ABC?

• A) Equipment setup and machining
• B) Materials ordering and quality control
• C) Materials ordering and machining
• D) None. The drivers for each activity differ.