The Pinewood Furniture Company Pty Ltd plans to manufacture two lines of chairs in the coming year - lounge and patio. The company is considering introducing an activity-based costing system. Given below are each activity, its cost and its related activity driver.

ActivityCostActivity DriverMaterial Setups300,000Number of setupsMaterial handling250,000Number of partsCutting700,000Number of partsAssembly600,000Direct labour hoursFinishing450,000Number of units

The level of activity for the year is:

LoungePatioUnits to be produced10,0005,000Number of Setups6060Number of parts per unit105Direct Labour Hours per unit52

Under an activity-based costing system, what is the activity cost per unit of activity driver for material handling?

Select one:

a.$2.00 per part

b.$16.67 per part

c.$2.50 per part

d.$ 5.00 per part

e.$ 4.17 per direct labour hour