Brannon Company Manufactures Ceiling Fans and Uses an Activity-Based Costing

Multiple Choice

Brannon Company manufactures ceiling fans and uses an activity-based costing system. Each ceiling fan consists of 20 separate parts totaling $95 in direct materials and requires 2.5 hours of machine time to produce. Additional information follows:
$\begin{array}{|l|l|r|}\hline\text { Activity }&\text { Allocation Base }&\text { Cost Allocation Rate }\\\hline \text { Materials handling } & \text { Number of parts } & \$ .08 \\\hline \text { Machining } & \text { Machine hours } & \$ 7.20 \\\hline \text { Assembling } & \text { Number of parts } & \$ .35 \\\hline \text { Packaging } & \text { Number of finished units } & \$ 2.70\\\hline\end{array}$
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What is the cost of materials handling per ceiling fan?

A) $1.60
B) $7.20
C) $6.00
D) $5.00