Chattanooga, Inc. has two categories of overhead: maintenance and inspection. Costs expected for these categories...
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Accounting
Chattanooga, Inc. has two categories of overhead: maintenance and inspection. Costs expected for these categories for the coming year are as follows:
Maintenance
$800,000
Inspection
400,000
The following data have been assembled for use in developing a bid for a proposed job:
Direct materials
$6,000
Direct labor
$16,000
Machine-hours
400
Number of inspections
4
Direct labor-hours
800
The practical capacity of machine-hours for all jobs during the year is 25,000, and for inspections is 800. These are the cost drivers for maintenance and inspection costs, respectively.
Using the appropriate cost drivers, the total cost of the potential job is:
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