Farm Inc, currently applies overhead USING DIRECT LABOR HOURS and has an expected capacity of...
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Accounting
Farm Inc, currently applies overhead USING DIRECT LABOR HOURS and has an expected capacity of 50,000 direct labor hours. The company has recently identified the activities of maintenance and inspection as the major contributors of manufacturing overhead. The company expects $50,000 in maintenance costs and $75,000 in inspection costs.
The following data have been assembled for use in developing a bid for a proposed job:
direct materials
$500
direct labor
$2000
number of inspections
4
direct labor hours
800
machine hours
500
the total expected number of inspections is 1,500 and the total expected number of machine hours for all jobs during the year is 25,000. Using ACTIVITY-BASED COSTING, and the appropriate drivers, the total cost of the potential job would be?
a. $1,200
b. $4,500
c. $5,700
d. $3,700
e. $2,500
f. $5,000
g. $4,300
h. none of the above
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