The Molotov Plant of Kaboom Industries Has Two Categories of Overhead

question 161

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 direct labor hours to assign overhead, the total cost of the potential job would be

• A)$2,000.
• B)$4,000.
• C)$4,500.
• D)$5,500.

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