Blade Breeze Company Manufactures Ceiling Fans and Uses an Activity-Based

question 156

Multiple Choice

Blade Breeze Company manufactures ceiling fans and uses an activity-based costing system.Each ceiling fan has 20 separate parts.The direct materials cost is $70,and each ceiling fan requires 2.50 hours of machine time to manufacture.Additional information is as follows: $$\begin{array} { | l | l | r | } \hline \text { Activity } & \text { Allocation Base } & \begin{array} { c } \text { Predetermined Overhead } \\\text { Allocation Rate }\end{array} \\\hline \text { Materials handling } & \text { Number of parts } & \$ 0.08 \\\hline \text { Machining } & \text { Machine hours } & 7.20 \\\hline \text { Assembling } & \text { Number of parts } & 0.35 \\\hline \text { Packaging } & \text { Number of finished units } & 2.80 \\\hline\end{array}$$ What is the cost of machining per ceiling fan? (Round any intermediate calculations and your final answer to the nearest cent.)

• A)$18.00
• B)$70.00
• C)$144.00
• D)$196.00

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Definitions:

Salvage Value

The anticipated recovery value of an asset when it no longer has usable life.

Straight-Line Method

A method of calculating depreciation by evenly allocating the cost of an asset minus its salvage value over its estimated useful life.

Office Furniture

Items and fixtures used in an office setting for the purpose of work, including desks, chairs, and file cabinets.

Revised Annual Depreciation

The updated calculation of depreciation expense per year after making any necessary adjustments to asset value or useful life.