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

question 36

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 foam pillow using ABC?

• A)$10.56 per foam pillow
• B)$26.00 per foam pillow
• C)$13.49 per foam pillow
• D)$50.00 per foam pillow

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Definitions:

Cultural Bias

The tendency to interpret and judge phenomena by standards inherent to one's own culture.

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The level of agreement among independent observers or raters on the assessment or observation of a particular feature, indicating the consistency of measurements.

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A complex psychiatric disorder characterized by distortions in thinking, perception, emotions, language, sense of self, and behavior.

Special Interest Groups

Organizations of people with shared interests who attempt to influence public policy and decision making to benefit their members or causes.