Room Chill Company Manufactures Ceiling Fans and Uses an Activity-Based

question 179

Multiple Choice

Room Chill Company manufactures ceiling fans and uses an activity-based costing system.Each ceiling fan has 20 separate parts.The direct materials cost is $75,and each ceiling fan requires 3.00 hours of machine time to manufacture.Additional information is as follows: $$\begin{array} { | l | l | l | } \hline \text { Activity } & \text { Allocation Base } & \begin{array} { l } \text { Predetermined Overhead } \\\text { Allocation Rate }\end{array} \\\hline \text { Materials handling } & \text { Number of parts } & \$ 0.08 \\\hline \text { Machining } & \text { Machine hours } & 7.60 \\\hline \text { Assembling } & \text { Number of parts } & 0.25 \\\hline \text { Packaging } & \text { Number of finished units } & 2.10 \\\hline\end{array}$$ What is the cost of assembling per ceiling fan? (Round any intermediate calculations and your final answer to the nearest cent.)

• A) $75.00
• B) $5.00
• C) $22.80
• D) $18.75

---

Definitions:

Fixed-price Policy

A pricing strategy where a product or service is sold at a specific price that does not change in response to market fluctuations or customer negotiations.

No Haggle

A pricing strategy where the seller sets a fixed price for a product or service, eliminating the need for negotiation.

CarMax Dealership

A chain of used-car dealerships in the United States known for its no-haggle pricing and comprehensive vehicle inspection process.

Fixed-price Policy

A pricing strategy where a product or service is sold at a consistent price, regardless of market changes.