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

question 61

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:
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:
Total expected machine hours for all jobs during the year is 25,000, and the total expected number of inspections is 1,500.
Using activity-based costing and the appropriate activity drivers, the total cost of the potential job would be

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

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