Question 4

Sheridan manufactures mattresses for the hotel industry. It has two products, Downy and Firm and total overhead of $510000. The company plans to manufacture 150 Downy mattresses and 340 Firm mattresses this year. In manufacturing the mattresses, the company must perform 710 material moves for the Downy and 290 for the Firm; it processes 115 purchase orders for the Downy and 85 for the Firm; and the company's employees work 2500 direct labour hours on the Downy product and 3500 on the Firm. Sheridan's total material handling costs are $292000 and its total purchasing costs are $218000.

Using ABC, how much overhead would be assigned to the Downy product?

$510000

$332670

$255000

$177330