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Sleep-Tight manufactures mattresses for the hotel industry.It has two products, Downy and Firm and total overhead of $504,000.The company plans to manufacture 200 Downy mattresses and 300 Firm mattresses this year.In manufacturing the mattresses, the company must perform 700 material moves for the Downy and 300 for the Firm; it processes 114 purchase orders for the Downy and 90 for the Firm; and the company's employees work 2,800 direct labour hours on the Downy product and 3,500 on the Firm.Sleep-Tight's total material handling costs are $300,000 and its total purchasing costs are $204,000.
-A relevant unit-level cost driver for a spa is:
A)Advertising the offerings in the spa.
B)Products used for facial care.
C)Training of new staff.
D)Hours patrons spend in the whirlpool.

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Use the following information to answer questions 
Sleep-Tight manufactures mattresses for the hotel industry.It has two products, Downy and Firm and total overhead of $504,000.The company plans to manufacture 200 Downy mattresses and 300 Firm mattresses this year.In manufacturing the mattresses, the company must perform 700 material moves for the Downy and 300 for the Firm; it processes 114 purchase orders for the Downy and 90 for the Firm; and the company's employees work 2,800 direct labour hours on the Downy product and 3,500 on the Firm.Sleep-Tight's total material handling costs are $300,000 and its total purchasing costs are $204,000.
-A relevant unit-level cost driver for a spa is:
A)Advertising the offerings in the spa.
B)Products used for facial care.
C)Training of new staff.
D)Hours patrons spend in the whirlpool.

Quizplus · Accepted Answer

The hours patrons spend in the whirlpool is a relevant unit-level cost driver for a spa as it directly affects the cost of providing the service. The longer the patrons stay in the whirlpool, the more resources and energy the spa will need to use to maintain the temperature and cleanliness of the water, leading to increased costs. A, B, and C are not unit-level cost drivers as they do not have a direct impact on the cost of providing a service per unit.

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