Figure 4-12 Vaughn, 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 labor hours.
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Refer to Figure 4-12.If the number of setups is used to assign setup costs, the amount of setup costs assigned to Job 10A would be
A) $1,600.
B) $1,000.
C) $800.
D) $1,680.

Question

Figure 4-12 Vaughn, 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 labor hours.
-
Refer to Figure 4-12.If the number of setups is used to assign setup costs, the amount of setup costs assigned to Job 10A would be
A) $1,600. 
B) $1,000. 
C) $800. 
D) $1,680.

Quizplus · Accepted Answer

According to the information given, the total setup costs are $4,000 and the total number of setups is 5. Therefore, the cost per setup is $800 ($4,000 ÷ 5 = $800). Job 10A requires 2 setups, so the total setup cost assigned to Job 10A would be 2 x $800 = $1,600.