A Company Incurs $4,050,000 of Overhead Each Year in Three

question 106

Multiple Choice

A company incurs $4,050,000 of overhead each year in three departments: Ordering and Receiving, Mixing, and Testing. The company prepares 2,000 purchase orders, works 50,000 mixing hours, and performs 1,500 tests per year in producing 200,000 drums of Goo and 600,000 drums of Slime. The following data are available: $\begin{array}{crr}\text { Department}&\text {Expected use of Driver }&\text {Cost }\\\text { Ordering and Receiving } & 2,000 & \$ 1,200,000 \\\text { Mixing } & 50,000 & 1,500,000 \\\text { Testing } & 1,500 & 1,350,000\end{array}$

$\text { Production information for Goo is as follows: }$
$\begin{array}{cr}\text { Department }&\text { Expected use of Driver }\\\text { Ordering and Receiving } & 400 \\\text { Mixing } & 20,000 \\\text { Testing } & 500\end{array}$ Compute the amount of overhead assigned to Goo.

• A)$1,012,500
• B)$1,290,000
• C)$1,582,146
• D)$2,025,000