Figure 4-13 The Xiang plant has two categories of overhead: maintenance and inspection.
Costs expected for these categories for the coming year are as follows:
The plant currently applies overhead using direct labor hours and expected capacity of 50,000 direct labor hours.The following data have been assembled for use in developing a bid for a proposed job:
Total expected machine hours for all jobs during the year is 25,000, and the total expected number of inspections is 1,500.
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Refer to Figure 4-13.Using activity-based costing and the appropriate activity drivers, the total cost of the potential job would be
A) $1,200.
B) $1,800.
C) $3,700.
D) $3,875.

Question

Figure 4-13 The Xiang plant has two categories of overhead: maintenance and inspection.
Costs expected for these categories for the coming year are as follows:
 The plant currently applies overhead using direct labor hours and expected capacity of 50,000 direct labor hours.The following data have been assembled for use in developing a bid for a proposed job:
 Total expected machine hours for all jobs during the year is 25,000, and the total expected number of inspections is 1,500.
-
Refer to Figure 4-13.Using activity-based costing and the appropriate activity drivers, the total cost of the potential job would be
A) $1,200. 
B) $1,800. 
C) $3,700. 
D) $3,875.

Quizplus · Accepted Answer

Activity-based costing allocates costs based on actual activities and drivers. The total cost of the potential job is calculated by summing up all the costs associated with the specific activities required for the job, which amounts to $3,700.

Figure 4-13 the Xiang Plant Has Two Categories of Overhead