The overdale plant has two categories of overhead: maintenance and inspection. C

Question

The overdale plant has two categories of overhead: maintenance and inspection. Costs expected for these categories for the coming year are as follows: The plant currently applies overhead using direct labor hours and expected capacity of 80,000 direct labor hours. The following data has be assembled for use in developing a bid for a proposed job: Total expected machine hours for all jobs during the year are 40,000, and the total expected number inspections is 2,500. Refer to figure 4-3. Using direct labor hours to assign overhead the total cost of the potential job Refer to figure 4-3. Using the activity-based costing and the appropriate cost drivers, the total cost of potential job would be

Explanation / Answer

a) $ 9,500

b) $ 8,180

Direct material        1,500 Direct Labor        5,000 Oveheads 3000 750*4 Total cost        9,500 workings: Maintenance    120,000 inspection    200,000    320,000 Direct labor hours      80,000 Ovehead absorption rate $4.00 per DLH

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