The Xiang Plant Has Two Categories of Overhead: Maintenance and Inspection

question 110

Multiple Choice

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 the figure.Using activity-based costing and the appropriate activity drivers,what would be the total cost of the potential job?

• A)$1,200
• B)$1,800
• C)$3,700
• D)$3,875

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