Gale Corporation manufactures windsocks. The business recently decided to adopt an ABC accounting system. The following activities have been identified:

Cost Driver Chosen Conversion Cost Per Unit

Activity as Allocation Base of Allocation Base

Materials handling Number of parts $ 1.00

Machining Machine hours 60.00

Packaging Number of finished units 2.00

Each windsock requires three parts and spends five minutes in the machining department. The total cost of direct materials and direct labor is $3.50 per windsock. Gale produces 20,000 windsocks each year and sells them at 140% of cost.

1. The total cost of producing the 20,000 windsocks is:

A. $160,000.

B. $230,000.

C. $270,000.

D. $1,260,000.

2. The selling price per windsock is:

A. $13.50.

B. $18.90.

C. $16.10.

D. $88.20.