Rather Bedding Makes Two Types of Pillow-Down and Foam What Is the Overhead Cost for Each Down Pillow When

question 12

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. $\begin{array}{|l|c|c|c|c|}\hline{\text { Cost Pool }} & \begin{array}{c}\text { Driver and } \\\text { Level }\end{array} & \begin{array}{c}\text { Estim ated } \\\text { Costs }\end{array} & \begin{array}{c}\text { Use of Driver by } \\\text { Down Pillows }\end{array} & \begin{array}{c}\text { Use of Driver by } \\\text { Foam Pillows }\end{array} \\\hline \text { Equipment setup } & 360 \text { setups } & \$ 216,000 & 120 \text { setups } & 240 \text { setups } \\\hline \begin{array}{l}\text { Materials } \\\text { ordering }\end{array} & 6,000 \text { orders } & \$ 60,000 & 2,400 \text { orders } & 3,600 \text { orders } \\\hline \text { Quality control } & \begin{array}{c}2,000 \\\text { inspections }\end{array} & \$ 36,000 & 800 \text { inspections } & 1,200 \text { inspections } \\\hline \text { Machining } & \begin{array}{c}8,000 \\\text { machine } \\\text { hours }\end{array} & \$ 86,800 & \begin{array}{c}4,200 \text { machine } \\\text { hours }\end{array} & \begin{array}{c}3,800 \text { machine } \\\text { hours }\end{array} \\\hline\end{array}$ What is the overhead cost for each down pillow when all overhead is applied based on machine hours?

• A)$34.90 per down pillow
• B)$49.85 per down pillow
• C)$10.85 per down pillow
• D)None of these answer choices are correct.

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Definitions:

Types of Intelligence

Multiple theories exist identifying different forms of intelligence, such as linguistic, logical-mathematical, musical, and spatial.

Gardner

Gardner refers to Howard Gardner, an American developmental psychologist best known for his theory of multiple intelligences, which proposes that intelligence is not a single general ability but rather includes multiple, specific modalities.

Intelligence

The ability to acquire knowledge, think abstractly, and adapt to new situations effectively.

Howard Gardner

An American developmental psychologist known for his theory of multiple intelligences, which suggests that intelligence is multidimensional and not confined to a single general ability.