The LMN Company Recently Switched to Activity-Based Costing (ABC)from the Department

question 53

Multiple Choice

The LMN Company recently switched to activity-based costing (ABC) from the department allocation method.The department method allocated overhead costs at a rate of $60 per machine hour.The cost accountant for Department XZ has gathered the following data: During April,LMN purchased and used $100,000 of direct materials at $20 per ton.There were eight (8) production runs using a total of 12,000 machine hours in April.The manager of Department XZ needed 12 inspections.Actual overhead costs totaled $820,000 for the month.How much overhead costs were applied to the Work-in-Process Inventory during April using activity-based costing?

• A)$536,000.
• B)$720,000.
• C)$736,000.
• D)$820,000.

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