Figure 4 The Overdale plant has two categories of overhead: maintenance and insp

Question

Figure 4

The Overdale plant has two categories of overhead: maintenance and inspection. Costs expected for these categories for the coming year are as follows:

   Maintenance $120,000

   Inspection                          $200,000

The plant currently applies overhead using direct labor hours and expected capacity of 80,000 direct labor hour. Overdale uses only one overhead rate for the entire plant.  

The following data have been assembled in developing a bid for a proposed job:

   Direct materials                      $1,500

   Direct labor $5,000

   Machine hours 400

   Number of inspections 6

   Direct labor hours 750

Total expected machine hours for all jobs during the year are 40,000, and the total expected number of inspections is 2,500.

22. Refer to Figure 4 and assume the traditional system of overhead allocation. Using direct labor hours to assign overhead, the total cost of the potential job would be

A. $9,500

B. $3,000

C. $1,600

D. $6,000

E. $1,000

Explanation / Answer

A. $9,500 Dear Student Thank you for using Chegg Please find below the answer and please give thumbs up   Statementshowing Computations Paticulars Amount Expected Overhead = 120,000 + 200,000             320,000.00 Expected direct labour hours               80,000.00 Direct labour hour rate = 320,000/80,000                          4.00 Q22 Direct materials                  1,500.00 Direct labour                  5,000.00 Overhead = 750*4                  3,000.00 the total cost of the potential job would be                  9,500.00

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