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

question 9

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: $\begin{array}{crr}\text { Department }&\text { Expected use of Driver }&\text { Cost }\\\hline \text { Ordering and Receiving } & 2,000 & \$ 1,200,000 \\\text { Mixing } & 50,000 & 1,500,000 \\\text { Testing } & 1,500 & 1,350,000\end{array}$

$\text { Production information for Slime is as follows: }$
$\begin{array}{cr}\text { Department }&\text { Expected use of Driver }\\\text { Ordering and Receiving } & 1,600 \\\text { Mixing } & 30,000 \\\text { Testing } & 1,000\end{array}$ Compute the amount of overhead assigned to Goo.

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

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Definitions:

Federal Regulations

Laws established by the federal government to control or govern specific activities, often enforcing standards.

Supply Department

The department within an organization responsible for the procurement and management of goods and services required for its operations.

Hazardous Waste

Waste materials that are dangerous or potentially harmful to human health or the environment.

Plant Equipment

Machinery and tools used in industrial production or manufacturing processes.