The Following Estimated Overhead Cost Information Is Available for Michaels

question 12

Multiple Choice

The following estimated overhead cost information is available for Michaels Company for the most recent year.
$\begin{array}{llc}\text { Activity } & \text { Allocation base } & \text { Overhead cost } \\\hline \text { Purchasing } & \text { Number of purchase orders } & \$ 400,000 \\\text { Receiving } & \text { Number of shipments received } & \$ 210,000 \\\text { Machine Setups } & \text { Number of setups } & \$ 320,000 \\\text { Quality Control } & \text { Number of inspections } & \$ 90,000\end{array}$

The company anticipates the following activity levels during the year: 5,000 purchase orders issued;7,000 shipments received;80,000 machine setups performed;and 9,000 inspections conducted.
What is the overhead rate for the quality control activity?

• A)$10
• B)$80
• C)$7
• D)$4
• E)None of the answer choices is correct.

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