The Molotov Plant of Kaboom Industries Has Two Categories of Overhead

question 83

Multiple Choice

The Molotov plant of Kaboom Industries has two categories of overhead: maintenance and inspection. Costs expected for these categories for the coming year are as follows:
$\begin{array}{lr}\text { Maintenance } & \$ 50,000 \\\text { Inspection } & 75,000\end{array}$
The plant currently applies overhead using direct labor hours and expected cap acity of 50,000 direct labor hours. The following data have been assembled for use in developing a bid for a proposedjob:
$\begin{array}{lr}\text { Direct materials } & \$ 500 \\\text { Direct labor } & \$ 2,000 \\\text { Machine hours } & 500 \\\text { Number of inspections } & 4 \\\text { Direct labor hours } & 800\end{array}$ Total expected machine hours for all jobs during the year is 25,000, and the total expected number of inspections is 1,500.
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.

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