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

True/False

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

Each pillow consists of 4 parts and the total direct materials cost per pillow is $3.50. There is no direct labor. If Sleep Tight sells pillows for $21.00, they will earn a gross profit of $1.30 per pillow.