Greem, Inc., has identified the following overhead costs and activity drivers for next year: The following are two of the jobs completed during the year:
The company's normal activity is 2,000 direct labour hours.
If the four activity drivers are used to allocate overhead costs, total overhead allocated to Job 10A would be

A) £5,533.
B) £4,830.
C) £5,030.
D) £5,630.

Question

Greem, Inc., has identified the following overhead costs and activity drivers for next year: The following are two of the jobs completed during the year:
 The company's normal activity is 2,000 direct labour hours.
If the four activity drivers are used to allocate overhead costs, total overhead allocated to Job 10A would be

A) £5,533. 
B) £4,830. 
C) £5,030. 
D) £5,630.

Quizplus · Accepted Answer

To calculate the overhead cost allocated to Job 10A, we need to use the activity rates for each of the activity drivers and multiply them by the actual usage of each driver for that job.

Activity rate for machine hours = £10 per hour
Activity rate for setups = £70 per setup
Activity rate for batch orders = £60 per order
Activity rate for inspection hours = £20 per hour

For Job 10A:
- Machine hours used = 200
- Setups required = 1
- Batch orders required = 2
- Inspection hours required = 20

So, the total overhead allocated to Job 10A would be:

(200 x £10) + (1 x £70) + (2 x £60) + (20 x £20) = £2,000 + £70 + £120 + £400 = £2,590

Therefore, the correct answer is C (£5,030).