Figure 4 The Overdale plant has two categories of overhead: maintenance and insp
ID: 2562490 • Letter: F
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.
Refer to Figure 4. Using activity-based costing and the appropriate cost drivers (machine hours for maintenance costs and number of inspections for inspection costs), the total cost of the potential job would be
A. $9,230
B. $2,000
C. $1,680
D. $2,250
E. $8,180
Explanation / Answer
E. $8,180 Dear Student Thank you for using Chegg Please find below the answer and please give thumbs up Statement showing computations Particulars Amount a Activity Driver No of Activity b Cost per activity c= a/b Maintenance 120,000.00 Machine hours 40,000.00 3.00 Inspections 200,000.00 Inspections 2,500.00 80.00 Total Overhead 320,000.00 Q22 Direct materials 1,500.00 Direct labour 5,000.00 Overhead : Maintenance = 400 * 3 1,200.00 Inspections = 6*80 480.00 the total cost of the potential job would be 8,180.00
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