Winter Manufacturing Has Four Categories of Overhead

question 41

Multiple Choice

Winter Manufacturing has four categories of overhead. The four categories and expected overhead costs for each category for next year are listed as follows: Currently, overhead is applied using a predetermined overhead rate based upon budgeted direct labour hours. 100,000 direct labour hours are budgeted for next year.
The company has been asked to submit a bid for a proposed job. The plant manager feels that obtaining this job would result in new business in future years. Usually bids are based upon full manufacturing cost plus 10 percent.
Estimates for the proposed job are as follows:
The plant manager has heard of a new way of applying overhead that uses cost pools and activity cost drivers. Expected activity for the four activity drivers that would be used are:
What is the total cost of the proposed job if Winter Manufacturing uses direct labour hours as its only activity driver?

• A) £72,000
• B) £68,200
• C) £56,200
• D) £53,200

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Definitions:

Fuse

A safety device consisting of a strip of wire that melts and breaks an electric circuit if the current exceeds a safe level.

Excessive Current

A current flow surpassing the designed or safe limit of an electrical circuit or device, potentially leading to overheating or damage.

Total Resistance

The sum of all resistances in an electrical circuit, affecting the overall current flow.

Resistor Values

The resistance offered by a resistor, measured in Ohms, which determines how much it impedes the flow of electric current.