Spear Manufacturing Has Four Categories of Overhead

question 92

Multiple Choice

Spear Manufacturing has four categories of overhead. The four categories and 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. 20,000 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 15 percent. Estimates for the proposed job are as follows:
In the past, full manufacturing cost has been calculated by allocating overhead using a volume-based activity driver, direct labour hours. The plant manager has heard of a new way of applying overhead that uses cost pools and activity drivers. Expected activity for the four activity drivers that would be used are:
If material moves are used to assign material handling costs, the amount of material handling costs allocated to the proposed job would be

• A) £180.
• B) £170.
• C) £147.
• D) £60.

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Definitions:

Spokesperson

An individual designated to speak on behalf of a company, organization, or group, responsible for communicating its messages to the public or specific audiences.

Enabler

An individual or tool that facilitates the achievement of an objective or the solving of a problem.

Social Control

Mechanisms, strategies, and practices employed by society to regulate behavior and ensure conformity to norms and regulations.

Religious Organizations

Institutions dedicated to the practice and promotion of religious beliefs, rituals, and activities.