Sleep Tight Company manufactures pillows using an activity-based costing system. The following information is provided for the month of June: Each pillow consists of 4 parts, and the total direct materials cost per pillow is $3.50.
What is the total cost of materials handling and assembling for each pillow?

Question

Sleep Tight Company manufactures pillows using an activity-based costing system. The following information is provided for the month of June:  Each pillow consists of 4 parts, and the total direct materials cost per pillow is $3.50.
What is the total cost of materials handling and assembling for each pillow?

Quizplus · Accepted Answer

Since the company is using activity-based costing, we need to determine the cost of materials handling and assembling for each pillow based on the cost drivers associated with these activities. The information provided does not include the cost drivers or the activity costs, so we cannot determine the answer directly. However, we know that the total direct materials cost per pillow is $3.50, so we can eliminate choices A and C, which are both higher. That leaves us with choices B and D. Without additional information, we cannot determine which of these is correct. However, D seems unlikely since it is significantly lower than the other choices. Therefore, the best choice is B.

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