Figure 3-1
the Xiang Plant Has Two Categories of Overhead $\begin{array}{lr}\text { Maintenance } & £ 50,000 \\\text { Inspection } & 75,000\end{array}$

question 26

Multiple Choice

Figure 3-1
The Xiang plant 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 labour hours and expected capacity of 50,000 direct labour hours. The following data have been assembled for use in developing a bid for a proposed job: $\begin{array}{lr}\text { Direct materials } & £ 500 \\\text { Direct labour } & £ 2,000 \\\text { Machine hours } & 500 \\\text { Number of inspections } & 4 \\\text { Direct labour hours } & 800\end{array}$ Total expected machine hours for all jobs during the year is 25,000, and the total expected number of inspections is 1,500.
-Refer to Figure 3-1. Using direct labour hours to assign overhead, the total cost of the potential job would be

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

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