Figure 3 Ray Manufacturing Has Four Categories of Overhead. the Four Categories

question 48

Multiple Choice

Figure 3
Ray Manufacturing has four categories of overhead. The four categories and the expected overhead costs for each category for next year are as follows:
Currently, overhead is applied using a predetermined overhead rate based upon budgeted direct labour hours. For next year, 100,000 direct labour hours are budgeted.
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 cost drivers. Expected activity for the four activity-based cost drivers that would be used are as follows:

-Refer to Figure 3. If Ray Manufacturing used direct labour hours as the cost driver, the amount of overhead allocated to the proposed job would be

• A) £82,400
• B) £60,800
• C) £60,000
• D) £41,600

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Definitions:

Computerized Accounting System

Software used by companies to manage their financial transactions, records, and reports electronically.

Transactions Into QBO

The process of recording financial activities into the QuickBooks Online accounting software.

Onscreen Journal

A digital ledger or log used in accounting software to record financial transactions, accessible through a computer or mobile device interface.

Onscreen Forms

Digital or electronic forms displayed on a computer or device screen, facilitating data entry, submission, or information requests.