Whirlwind Fan Company Manufactures Ceiling Fans and Uses an Activity-Based

question 75

Multiple Choice

Whirlwind Fan Company manufactures ceiling fans and uses an activity-based costing system.Each ceiling fan has 20 separate parts.The direct material cost is $90,and each ceiling fan requires 2.50 hours of machine time to manufacture.Additional information is as follows: $$\begin{array} { | l | l | r | } \hline \text { Activity } & \text { Allocation Base } & \begin{array} { c } \text { Predetermined Overhead } \\\text { Allocation Rate }\end{array} \\\hline \text { Materials handling } & \text { Number of parts } & \$ 0.04 \\\hline \text { Machining } & \text { Machine hours } & 6.00 \\\hline \text { Assembling } & \text { Number of parts } & 0.20 \\\hline \text { Packaging } & \text { Number of finished units } & 2.50 \\\hline\end{array}$$ What is the cost of materials handling per ceiling fan? (Round any intermediate calculations and your final answer to two decimal places.)

• A)$0.80
• B)$6.00
• C)$2.50
• D)$6.25

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Definitions:

Money

A medium of exchange that facilitates trade, serves as a unit of account, a store of value, and can be in the form of coins, notes, or electronic.

Comparative Advantage

The ability of an individual or country to produce a particular good or service at a lower opportunity cost than others.

Motorcycle

A two-wheeled vehicle powered by an engine, used for transportation and recreational purposes.

Coffee

A popular beverage made by brewing roasted and ground beans of the Coffea plant.