Sleep Tight Company Manufactures Pillows Using an Activity-Based Costing System

question 43

Multiple Choice

Sleep Tight Company manufactures pillows using an activity-based costing system. The following information is provided for the month of June:
$\begin{array}{|l|r|r|r|}\hline &\text { Estimated Indirect }&&\text { Estimated Quantity of } \\\text { Activity } & \text { Activity Costs } & \text { Allocation Base } & \text { Allocation Base }\\\hline \text { Materials handling } & \$ 3,150 & \text { Number of parts } & 4,200 \text { parts } \\\hline \text { Assembling } & \$ 13,860 & \text { Number of parts } & 4,200 \text { parts } \\\hline \text { Packaging } & \$ 2,730 & \text { Number of pillows } & 1,050 \text { pillows }\\\hline\end{array}$

Each pillow consists of 4 parts, and the total direct materials cost per pillow is $3.50.
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What is the total cost of packaging per pillow?

• A) $3.50
• B) $7.00
• C) $9.38
• D) $2.60

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Definitions:

Trachea

Principal thoracic air duct of terrestrial vertebrates; windpipe. One of the microscopic air ducts (or tracheal tubes) branching throughout the body of most terrestrial arthropods and some terrestrial mollusks.

Partial Pressure

The pressure that a gas in a mixture of gases would exert if it alone occupied the entire volume.

Nitrogen Gas

A diatomic gas that is colorless, odorless, and makes up about 78% of the Earth's atmosphere, used by certain bacteria to produce usable forms of nitrogen for plants.

Sea Level

The average height of the sea's surface between high and low tide, used as a base reference for measuring elevation and depth on Earth.