A Company Incurs $1,200,000 of Overhead Each Year in Three

question 20

Multiple Choice

A company incurs $1,200,000 of overhead each year in three departments, Processing, Packaging, and Testing.The company performs 800 processing transactions, 200,000 packaging transactions, and 2,000 tests per year in producing 400,000 drums of oil and 600,000 drums of sludge.The following data are available: $$\begin{array} { c c c } \text { Department } & \text { Estimated use of Driver } & \text { Cost } \\\hline \text { Processing } & 800 & \$ 500,000 \\\text { Packaging } & 200,000 & 500,000 \\\text { Testing } & 2,000 & 200,000\end{array}$$ Production information for oil is as follows:
$$\begin{array} { l c } \underline{\text { Department }} &\underline{ \text { Estimated use of Driver }} \\\text { Processing } & 300 \\\text { Packaging } & 120,000 \\\text { Testing } & 1,600\end{array}$$ Calculate the amount of overhead assigned to oil.

• A)$600,000
• B)$647,500
• C)$552,500
• D)$460,000

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Definitions:

Structure

The arrangement of atoms within a molecule, determining its shape and properties.

Product

A substance that is formed as a result of a chemical reaction.

Reagents

Chemicals or materials introduced into a system to initiate or participate in chemical reactions.

Transformation

A broad term indicating change, in chemistry often referring to the conversion of a compound into another by chemical reaction.