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. The direct material cost is $95 and each ceiling fan requires 2.5 hours of machine time to manufacture. Additional information is as follows: $\begin{array}{|l|l|c|}\hline{\text { Activity }} & {\text { Allocation Base }} & \text { Cost Allocation Rate } \$ \\\hline \text { Materials handling } & \text { Number of parts } & 0.08 \\\hline \text { Machining } & \text { Machine hours } & 7.20 \\\hline \text { Assembling } & \text { Number of parts } & 0.35 \\\hline \text { Packaging } & \text { Number of finished units } & 2.70 \\\hline\end{array}$
-What is the cost of materials handling per ceiling fan?

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