Reddy Company has the following cost formulas for overhead: $$\begin{array} { | l | l | }
\hline \text { Cost } & \text { Cost Formula } \
\hline \text { Indirect materials } & \$ 2,000 \text { plus } \$ 0.40 \text { per machine hour } \
\hline \text { Maintenance } & \$ 1,500 \text { plus } \$ 0.60 \text { per machine hour } \
\hline \text { Machine setup } & \$ 0.30 \text { per machine hour } \
\hline \text { Utilities } & \$ 200 \text { plus } \$ 0.10 \text { per machine hour } \
\hline \text { Depreciation } & \$ 800 \
\hline
\end{array}$$ Based on these cost formulas, the total overhead cost at 600 machine hours is expected to be?
A)$5,200.
B)$4,500.
C)$5,600.
D)$5,340.

Question

Reddy Company has the following cost formulas for overhead: $$\begin{array} { | l | l | } 
\hline \text { Cost } & \text { Cost Formula } \
\hline \text { Indirect materials } & \$ 2,000 \text { plus } \$ 0.40 \text { per machine hour } \
\hline \text { Maintenance } & \$ 1,500 \text { plus } \$ 0.60 \text { per machine hour } \
\hline \text { Machine setup } & \$ 0.30 \text { per machine hour } \
\hline \text { Utilities } & \$ 200 \text { plus } \$ 0.10 \text { per machine hour } \
\hline \text { Depreciation } & \$ 800 \
\hline
\end{array}$$ Based on these cost formulas, the total overhead cost at 600 machine hours is expected to be?
A)$5,200.
B)$4,500.
C)$5,600.
D)$5,340.

Quizplus · Accepted Answer

The total overhead cost is calculated by adding the fixed costs and the variable costs (calculated by multiplying the per machine hour rate by 600 machine hours). Indirect materials: $2,000 + ($0.40 * 600) = $2,240. Maintenance: $1,500 + ($0.60 * 600) = $1,860. Machine setup: $0.30 * 600 = $180. Utilities: $200 + ($0.10 * 600) = $260. Depreciation: $800. Adding these amounts gives a total of $5,340.

Reddy Company Has the Following Cost Formulas for Overhead Based on These Cost Formulas, the Total Overhead Cost at